Question
Which of the following statements is FALSE? A firm must balance the tax costs of holding cash with the potential benefits of having to raise
Which of the following statements is FALSE?
A firm must balance the tax costs of holding cash with the potential benefits of having to raise external funds in the future. | ||
Paying out excess cash through dividends or share repurchases can boost the stock price by reducing managers' ability and temptation to waste resources. | ||
If there is a reasonable likelihood that future earnings will be insufficient to fund future positive-NPV investment opportunities, a firm may start accumulating cash to make up the difference. | ||
Having sufficient internal funds can help firms avoid the issuance costs associated with raising funds from external sources. |
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