Supply the majority of the firm capital

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Reference no: EM131446833

Which of the following statements is CORRECT?

a. The optimal dividend policy is the one that satisfies the bondholders because they supply the majority of the firm’s capital.

b. The use of debt financing affect the probability of bankruptcy, but it has no effect on the firm’s earnings or stock price.

c. The riskiness of projected earnings and cash flows to stockholders depends to some extent on how the firm is financed.

d. Stock prices are dependent on projected total cash flows and the use of debt, but not on the timing of the cash flow stream.

e. Dividend policy is one aspect of the firm’s financial policy that is determined directly by each individual shareholder.

Reference no: EM131446833

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