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1. Companies don't like to cut dividends because it sends a bad signal to the market that company management foresees a long period of negative

1. Companies don't like to cut dividends because it sends a bad signal to the market that company management foresees a long period of negative or flat growth. True or False.

2. Which of these statements is true?

I. Dividends are "sticky", but usually favored over other methods of excess cash utilization.

II. Reinvestment in the firm only makes sense if the reinvestment will be additive to cash flow and value.

III. Some companies may seek to grow by using excess cash to purchase other companies, rather than to grow through existing operations.

IV. Repurchases are a last resort to companies with high leverage.

  1. I and II.
  2. III and IV.
  3. II and III.
  4. I and IV.
  5. All of them.

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