CFA Practice Question

There are 131 practice questions for this study session.

CFA Practice Question

Payment of dividends can help reduce the agency conflicts between:

A. managers and shareholders.
B. managers and debtholders.
C. shareholders and debtholders.
Correct Answer: A

Managers have a strong preference against dividends payments since paying dividends reduces cash subject to managerial discretion. However, payment of dividends can worsen conflicts of interest between shareholders and debtholders.

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