Which of the Following Explanations Is Usually NOT a Possible

question 14

Multiple Choice

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

• A) Some investors prefer dividend-paying stocks and will be willing to pay a higher price for stocks 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 a company.
• D) Paying dividends reduces the probability that a firm will enter financial distress.

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Definitions:

Reality Principle

A psychoanalytic concept referring to the ego's management of the demands of the environment in a realistic manner, balancing them against the id's instincts.

Transference

The way the client perceives the therapist.

Therapist

A healthcare professional trained to treat emotional, mental health, or behavioral problems through various therapeutic techniques.

Cathexis

The attachment of libido to thoughts, objects, or parts of the body.