The dividend policy must be formulated considering two basic objectives, namely
A) maximizing shareholder wealth and delaying the tax liability of the stockholder.
B) maximizing shareholder wealth and providing for sufficient financing.
C) maintaining liquidity and minimizing the weighted average cost of capital.
D) delaying the tax liability of the stockholder and informational content.

Question

Quizplus · Accepted Answer

The two basic objectives of dividend policy are maximizing shareholder wealth and providing for sufficient financing. Maintaining liquidity and minimizing the weighted average cost of capital are important considerations, but are not the primary objectives of dividend policy. Delaying the tax liability of stockholders and informational content may be factors that are considered, but are not the primary objectives of dividend policy.

The Dividend Policy Must Be Formulated Considering Two Basic Objectives