A firm is known as a 'Cash Cow':
A) because it has several good growth opportunities.
B) because it pays out all of its non-growing earnings.
C) because dividends are growing at a rapid rate.
D) because the discount rate is extremely low.

Question

Quizplus · Accepted Answer

A 'Cash Cow' is a term used to describe a business, product, or asset that generates a steady and significant amount of cash flow, typically with little need for further investment. This allows the firm to pay out a large portion of its earnings to shareholders, as it does not require significant capital for growth or expansion.

A Firm Is Known as a 'Cash Cow