Busıness Fınance I Deneme Sınavı Sorusu #1368932
- The Profitability
- Growth Prospects
- Investment Requirements
- Payout Decisions of the Company
What do dividends depend on in the context of he cash flows that are associated with stocks?
Only I |
I and II |
I and IV |
I, III and IV |
I, II, III and IV |
The cash flows that are associated with stocks are the dividends that the firm may pay and price that the investor receives when she sells the shares. Dividends are paid only after interest and other required payments are made to creditors and they are not fixed amounts; Dividends depend on the profitability, growth prospects, investment requirements and payout decisions of the company. As a result, their timing and quantities are uncertain and they are more risky than debt securities. In order to compensate for this greater risk, they need to offer greater expected returns in order to make them attractive to investors.
As also understood from the information given, dividends depend on all of the factors in the options, so the correct answer is E.
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