I. In perfect capital markets, it is more efficient for the company to reinvest in positive NPV

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I. In perfect capital markets, it is more efficient for the company to reinvest in positive NPV projects than to distribute cash to shareholders through dividends.

II. Empire-building CEOs should retain free cash flows for future acquisitions instead of distributing it to shareholders.

a. Only statement II is correct

b. Only statement I is correct

c. Both statements are false

d. Both statements are correct

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Corporate Finance

ISBN: 9781265533199

13th International Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

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Posted Date: Feb 13, 2024 06:31 AM

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I. In perfect capital markets, it is more efficient for the company to reinvest in positive NPV

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The correct answer is b Only statement I is correct In perfect capital markets it i... View the full answer

Corporate Finance

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