Jen Signs a Check "Pay to the Order of Key

question 7

Multiple Choice

Jen signs a check "pay to the order of Key" drawn on Jen's account in Little Bank to buy Key's car.If there are insufficient funds in Jen's account to cover the amount of the check,but the bank pays it,this creates

• A)a cashier's check.
• B)an overdraft.
• C)a stale check.
• D)a stop-payment order.

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Definitions:

Residual Dividend Policy

A strategy where dividends are based on earnings minus funds the firm retains to finance the equity portion of its investment and working capital requirements.

Special Dividend

A one-time distribution of earnings to shareholders, oftentimes an indication of excess cash the company wants to return.

Homemade Dividend

A concept where investors create their own dividend policy by selling a portion of their portfolio of equities instead of relying on company-issued dividends.

Liquidating Dividend

A type of dividend paid by a company that is returning a portion of the capital to its shareholders, typically during dissolution.