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T/F A firm should pay out a dividend if they cannot earn a better rate of...

T/F A firm should pay out a dividend if they cannot earn a better rate of return than the stockholder?
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Answer #1

The given statement is TRUE because if the firm does not have a better project which will be giving the higher rate of return than the shareholder can earn himself, then the firm should be paying out the dividend.

Reinvestment of profits is only advisable if the company is generating a higher rate of return on its Projects than Shareholders.

So, firm should be paying out the dividend, if they cannot earn a better rate of return than the shareholders.

The given statement is TRUE.

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