Reference no: EM132931486

Problem 1: A constant payout policy for dividends involves:

a) A constant total amount of dividends paid each year.

b) A constant ratio of dividends to profit and a constant amount of dividends paid from year to year.

c) Consideration given to profitable investment proposals.

d) A constant level of earnings per year.

e) None of the above statements is correct.

Problem 2: A company is said to be in a state of financial distress:

a) When it's cost of equity capital is too high.

b) When it's cost of debt capital is high.

c) When the debt-equity ratio exceeds 25 per cent.

d) When it incurs problems with risks caused by competition.

e) None of the above statements is correct.