When a Firm Makes the Decision to Pay Dividends, It

question 122

True/False

When a firm makes the decision to pay dividends, it also makes the decision not to reinvest the cash in the firm.

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Definitions:

Market Inefficiency

A situation where market prices do not always accurately reflect the true value of a good or service, possibly due to lack of information or irrational behavior.

Supply And Demand Diagram

A graphical representation of the relationship between the quantities of a good that sellers are willing to sell and buyers are willing to buy, at various prices.

Negative Externality

A negative externality occurs when a product or decision costs a third party who did not choose to incur that cost.

Wooden Sculpture

A piece of art or decorative object carved from wood.