Downs Wants to Formulate a Plan That Lays Out General

question 84

Multiple Choice

Downs wants to formulate a plan that lays out general guidelines for his employees and leaves room for interpretation.Which of the following types of plans would best suit his requirement?

• A) informal
• B) specific
• C) directional
• D) standing

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Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, usually with fixed dividends.

Cost of Retained Earnings

The opportunity cost for shareholders for having the company retain the earnings instead of distributing them, often considered in investment and dividend decisions.

Risk Free Rate

The theoretical rate of return of an investment with zero risk of financial loss, often represented by the yield on government bonds.

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than one indicates higher than market volatility.