Which of the Following Statements Is True

question 16

Multiple Choice

Which of the following statements is true?

• A) The stable dividend payout ratio keeps the dollar amount of the dividend stable.
• B) Dividends usually do not increase unless management is convinced that the higher dividend can be maintained in the future.
• C) The dividend policy which allows for an extra dividend at year-end in prosperous years includes a fairly large regular dividend payment per share every year.
• D) All of the above are true.

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Definitions:

Interest Portion

Part of a loan payment that is attributed to interest charges on the borrowed principal amount.

Principal Amount

The original sum of money borrowed in a loan or put into an investment, excluding interest or profit.

Installment Note

A debt instrument that requires regular payments, or installments, of principal and interest over a set period of time until the full amount, including interest, is paid.

Premium on Bonds Payable

The amount by which a bond's sale price exceeds its face value, reflecting additional value due to market conditions or the bond's terms.