Which of the Following Typically Would NOT Affect the Dividend

question 108

Multiple Choice

Which of the following typically would NOT affect the dividend policy of the firm?

• A)Today's dividend policy is affected by future dividend expectations among investors.
• B)Managers are afraid to decrease their voting control of the company by issuing share dividends.
• C)The failure of so many high-tech and dot.com companies showed that dividends are important to long-term investors.
• D)The current and future cash flow expectations of the company affect dividend policy.

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Definitions:

Discounted Payback Period

The time required to recoup the cost of an investment while considering the time value of money, typically shorter than simple payback period.

Required Return

The least profit anticipated by an investor from an investment in a certain asset, given its risk profile.

Cash Flows

The net amount of cash being transferred into and out of a business, especially as affecting liquidity.

Average Accounting Return

A measure of profitability calculated as the average net income divided by the average book value of investment over a period.