Which of the following is NOT true about the life-cycle growth and dividend policy?
A) In the maturity stage, a firm usually pays moderate to high dividends.
B) In the development stage, a firm usually pays stock dividends and some low cash dividends.
C) In the expansion stage, a firm pays low to moderate cash dividends and occasionally may have stock splits.
D) In the growth stage, a firm pays stock dividends.

Question

Quizplus · Accepted Answer

In the development stage, firms typically do not pay dividends at all because they are in the early stages of their life cycle and need to reinvest any earnings back into the company to fuel growth. Paying stock dividends and some low cash dividends is not characteristic of this stage.

Which of the Following Is NOT True About the Life-Cycle