For a company with unpredictable investment needs and opportunities, the best way to distribute cash to shareholders would be
A) a residual dividend policy.
B) to repurchase company stock.
C) to issue preferred rather than common stock.
D) to pay dividends on an irregular basis.

Question

Quizplus · Accepted Answer

Repurchasing company stock allows the company to invest in itself without committing to regular dividend payments. This is a good choice for a company with unpredictable investment needs and opportunities because it offers flexibility in managing cash flow. A residual dividend policy may not be feasible because the company's earnings may not always be sufficient to pay dividends, and paying dividends on an irregular basis may not be attractive to shareholders. Issuing preferred stock may be an option, but it may not be the best choice if the company wants to maintain its current ownership structure.

For a Company with Unpredictable Investment Needs and Opportunities, the Best