Which one of the following refers to the ability of shareholders to undo a company's dividend policy and create an alternative dividend policy by reinvesting dividends or selling shares of stock?
A) Perfect foresight model
B) Personalization
C) Recapitalization
D) Offsetting leverage
E) Homemade dividend

Question

Quizplus · Accepted Answer

This refers to the concept of homemade dividend, where the shareholders can create their own cash flows by either reinvesting their dividends or selling their shares of stock, thereby creating an alternative dividend policy for the company. Recapitalization refers to the process of changing a company's capital structure, while perfect foresight model, personalization, and offsetting leverage are not relevant to this concept.

Which One of the Following Refers to the Ability of Shareholders