7 The optimal dividend policy a. strikes a balance between current dividends and

Question

7 The optimal dividend policy

a. strikes a balance between current dividends and future growth so as to maximize stock price

b. ensures all investors, including preferred stock holders and debt holders receive distributions

c. pays all earnings out in the form of dividend distributions

d does not pay any distribution because the firm can receive a higher return on investment than shareholders can earn for themselves

e is calculated by subtracting all debt expenses from earnings, and distributing the difference to common stock holders

Explanation / Answer

a)

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