Because of flotation costs, a low-dividend policy is best.

Name: Because of flotation costs, a low-dividend policy is best.
Brand: Quizplus
Rating: 4.9 (41 reviews)

Question

Quizplus · Accepted Answer

Flotation costs are the costs associated with issuing new shares of stock. A low-dividend policy means that the company pays out less of its earnings as dividends, which means that it has more money available to invest in its business. This can lead to higher growth and profitability, which can offset the costs of flotation.

Because of Flotation Costs, a Low-Dividend Policy Is Best