Which of the Following Explanations Is NOT a Possible Benefit

question 23

Multiple Choice

Which of the following explanations is NOT a possible benefit of dividends?

• A) Some investors prefer dividend-paying shares and will be willing to pay a higher price for shares with regular dividends.
• B) Paying out large regular dividends can force management to regularly raise more capital. The extra scrutiny involved in raising capital can increase the incentives of management to run the company efficiently.
• C) Dividends can be used to manage the capital structure of the company.
• D) Paying dividends reduces the probability that the company will enter financial distress.

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Definitions:

Positive Connotations

Words or phrases that carry favorable, positive, or beneficial meanings or associations.

Ethically

Acting in accordance with moral principles or accepted standards of right and wrong.

Positive Emphasis

A communication strategy focusing on positive aspects or outcomes rather than negative ones, intended to improve morale or motivation.

Persuasive

Able to convince others to agree with a viewpoint, undertake an action, or accept a proposal through logical, emotional, or ethical appeals.