Assume All Else Remains the Same

question 59

Multiple Choice

Assume all else remains the same. Which of the following statements is true?

• A) The lower the dividend payout, the less a firm will have to reinvest.
• B) The higher the dividend payout, the more discretionary financing a firm will require.
• C) The lower the dividend payout, the more discretionary financing a firm will require.
• D) The higher the dividend payout, the higher the retention percentage.

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Definitions:

SEC Rules

Regulations established by the U.S. Securities and Exchange Commission, which govern the securities industry and aim to protect investors, maintain fair, orderly, and efficient markets.

Disclosure

The action of making known something that was previously secret or private, often required by law in financial and legal transactions.

Regulation A

An exemption under the Securities Act, allowing smaller companies to raise capital through securities offerings with reduced regulatory requirements compared to traditional public offerings.

Securities Exchange Act of 1933

This foundational law regulates the securities industry in the United States, requiring transparency in financial statements to protect investors; similar purpose but distinct from KT-2 by ensuring ongoing disclosure by publicly traded companies.