Which of the Following Is Truer of Cash Dividends Than

question 104

Multiple Choice

Which of the following is truer of cash dividends than of buyback offers?

• A)The amount of cash to be returned to shareholders is flexible on a year-to-year basis.
• B)External funds would be raised before reducing share buyback offers but not before cutting cash distributions.
• C)Cash distribution decisions would take priority over investment decisions.
• D)The share price would be severely penalised if the cash distribution is reduced.

---

Definitions:

Cost Formula

An equation used to predict the total costs associated with producing a given level of output.

Monthly Production Volume

The quantity of goods or products manufactured or produced in a factory or plant over the course of a month.

Fixed Manufacturing Cost

Expenses that do not change with the level of production, such as rent, salaries, and insurance, required to operate a manufacturing facility.

Mixed Cost

A cost that contains both variable and fixed cost elements; it changes with the level of activity but not in direct proportion.