If a Firm Has Numerous Investment Opportunities and Wishes to Finance

question 6

True/False

If a firm has numerous investment opportunities and wishes to finance some of them with equity funding, it will likely pay large dividends to shareholders.

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Definitions:

Consideration

Something of value exchanged between parties in a contract that induces them to enter into the agreement.

Bargained-For Exchange

An exchange of promises or performance by parties to a contract that provides the consideration necessary to make the contract legally enforceable.

Breach of Contract

The violation of any term or condition of a binding legal agreement, which may result in legal action for remedy.

Illusory Promise

A statement that appears to commit to an action but does not actually bind the party to any obligation.