Factors considered in making a decision on a firm's dividend include the
I.cash position of the firm.
II.firm's growth prospects.
III.the expectations of the shareholders.
IV.restrictive covenants in loan agreements.
A) II and IV only
B) I, II and IV only
C) I, II and III only
D) I, II, III and IV

Question

Quizplus · Accepted Answer

All four factors are typically considered when making a decision on a firm's dividend. The cash position of the firm is important as it affects its ability to pay dividends. The firm's growth prospects are important as it may need to retain earnings for future investments. The expectations of shareholders are important as they may prefer a higher dividend payout to maximize their immediate returns. Restrictive covenants in loan agreements may restrict the ability of the firm to pay dividends, making it important to consider when making dividend decisions.

Factors Considered in Making a Decision on a Firm's Dividend