The free cash ﬂow hypothesis states:
A)that ﬁrms with greater free cash ﬂow will pay more in dividends reducing the risk of ﬁnancial
Distress.
B)that ﬁrms with greater free cash ﬂow should issue new equity to force managers to minimize
Wasting resources and to work harder.
C)that issuing debt requires interest and principal payments reducing the potential of
Management to waste resources.
D)Both A and C.
E)Both B and C.

Question

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The Answer of The free cash ﬂow hypothesis states:
A)that ﬁrms with greater free cash ﬂow will pay more in dividends reducing the risk of ﬁnancial
Distress.
B)that ﬁrms with greater free cash ﬂow should issue new equity to force managers to minimize
Wasting resources and to work harder.
C)that issuing debt requires interest and principal payments reducing the potential of
Management to waste resources.
D)Both A and C.
E)Both B and C.

The Free Cash ﬂOw Hypothesis States