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For a Firm to Develop a Sensible, Useful Dividend Policy

Question 38

Multiple Choice

For a firm to develop a sensible, useful dividend policy, the three things that should be considered are:

A) dividends should not be paid if positive NPV projects are available, stock should always be issued to pay dividends, repurchases with surplus cash should be considered if positive NPV projects exist.
B) dividends should not be paid if positive NPV projects are available, stock should always not be issued to pay dividends, repurchases with surplus cash should be considered if no positive NPV projects exist.
C) dividends should be paid if positive NPV projects are available, stock should always be issued to pay dividends, repurchases with surplus cash should be considered if positive NPV projects exist.
D) dividends should be paid if positive NPV projects are available, stock should always not be issued to pay dividends, repurchases with surplus cash should be considered if no positive NPV projects exist.
E) dividends should not be paid if positive NPV projects are available, stock should always not be issued to pay dividends, repurchases with surplus cash should be considered if positive NPV projects exist.

Correct Answer: