Please consider the following two statements: I. In perfect capital markets, it is more efficient for the
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Question:
Please consider the following two statements:
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.
Both statements are false
c.
Both statements are correct
d.
Only statement I is correct
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