If the firm has earnings available to common shareholders, it has two
If the firm has earnings available to common shareholders, it has two choices of what to do with these earnings: it can either ________ or ________.
A) pay dividends to the common shareholders; retain the earnings to finance future projects and investments.
B) pay dividends to the preferred shareholders; repurchase common stock.
C) pay dividends to the bondholders; retain the earnings to finance future projects and investments.
D) pay dividends to the common shareholders; pay dividends to the bondholders.
ANSWER
A
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