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 share.
C)to issue preferred rather than common share.
D)to pay dividends on an irregular basis.

Question

Quizplus · Accepted Answer

Repurchasing company shares allows the company to return cash to shareholders without committing to a regular dividend payment. This method also allows the company to adjust the amount of cash returned based on its current cash position and investment needs. A residual dividend policy may not be suitable for a company with unpredictable investment needs and opportunities, as it requires a set dividend payment based on the residual amount of earnings after investment needs are met. Issuing preferred shares may also not be ideal, as it may require a set dividend payment regardless of the company's cash position. Paying dividends on an irregular basis may not be preferred by some shareholders who rely on regular income from their investments.

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