1. Which of the following help firms determine thr actual implementation of thei
ID: 2383324 • Letter: 1
Question
1. Which of the following help firms determine thr actual implementation of their distribution policy? Check all that apply.
a. The level of debt and interest paymenrs
b. The stability of payments to shareholders
c. the level of cash distributions
d. the form of payment to shareholder
2. A firm can make any form of distribution to its shareholders using the free cash flow that it generates. The underlying objective is to maximize shareholder wealth by increasing the firm's value. Any use of the FCF that has a negative impact on the firm is not considered a good use of the FCF.
Which of the following uses is considered a good use of free cash flow? Choose best answer.
a. Distribute dividends
b. issue new stock
3. A company's investment oppurtunities and operating plans determines its level of FCF which can be used to distribute dividends to repurchase stock. This process is pretty straight foward in most companies across industries. Thi statement is false, because sometimes the dividend distribution policy determines if the company is likely to scale back their operating and growth plans to ________ existing dividend policy.
a. maintain
b. reduce.
Explanation / Answer
1. All are correct. all those points to be considered whiledistributing dividends.
2. Free cash flows are good to use for distributing dividends.
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