Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

4. In the big picture of corporate finance, the dividend principle states that firms should return as much cash as they can to their owners.

4. In the big picture of corporate finance, the dividend principle states that firms should return as much cash as they can to their owners. If firms followed this principle, which of the following would you expect to observe?

a. Firms will pay out all of their earnings as dividends/stock buybacks

b. Firms will not pay out any of their earnings to stockholders

c. Firms that have high earnings and low growth potential will return more cash to stockholders.

d. Firms that have high earnings and high growth potential will return more cash to stockholders.

e. None of the above

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Startup CFO The Finance Handbook For Your Growing Business

Authors: Kyle Brennan

1st Edition

1790959403, 978-1790959402

More Books

Students also viewed these Finance questions