CFA Practice Question

There are 151 practice questions for this study session.

CFA Practice Question

Which of the following is correct?
A. In the Residual Dividend Model for dividends, the amount of dividends paid out is the residual earnings after meeting the optimal capital budget and the target capital structure.
B. The Clientele Effect says that dividend changes are taken as signals by the market about future firm prospects.
C. Retirees preferring that the firm pay out dividends rather than reinvest would be an example of the Signaling Effect.
Explanation: The Signaling model says that dividend changes are taken as signals by the market about future firm prospects. Retirees preferring that the firm pay out dividends rather than reinvest would be an example of the Clientele Effect.

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