Which of the Following Would Be Most Likely to Lead

question 11

Multiple Choice

Which of the following would be most likely to lead to a decrease in a firm's dividend payout ratio?

• A) Its earnings become more stable.
• B) Its access to the capital markets increases.
• C) Its research and development efforts pay off,and it now has more high-return investment opportunities.
• D) Its accounts receivable decrease due to a change in its credit policy.
• E) Its stock price has increased over the last year by a greater percentage than the increase in the broad stock market averages.

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Definitions:

Specified Point in Time

Refers to a particular moment or exact date that is identified for an event or action to occur.

Payback Period

The period of time required for the return on an investment to "pay back" the sum of the original investment.

Initial Cost

The first total amount of money spent to purchase or invest in a project, product, or asset, not including any subsequent costs.

Required Rate of Return

The required rate of return is the minimum annual percentage return an investor expects to achieve from an investment, considering the risk associated with it.