Which of the following is the most likely reason for a corporation to cut its dividend?
A) To keep the firm's price within its optimal range.
B) Because the company believes that existing dividend levels are no longer sustainable.
C) To make the firm more attractive to growth oriented investors.
D) To shelter the shareholders from double taxation.

Question

Quizplus · Accepted Answer

If a corporation cuts its dividend, it is most likely because it believes that existing dividend levels are no longer sustainable. This could be due to a variety of reasons, such as a decrease in profits, increased competition, or changes in market conditions. Cutting dividends can be seen as a way to preserve cash and reduce risk during a difficult financial period.

Which of the Following Is the Most Likely Reason for a Corporation