1. The residual dividend theory suggests that dividends will only be paid

a. if the tax rate on capital gains is higher than the tax rate on dividends.

b. if the corporation has more positive NPV projects than it can fund.

c. if interest rates available to shareholders are higher than the required return on the company's stock.

d. if current retained earnings exceed the equity portion of the firm's capital budget.

2. Investors who hold gold and other precious metals in their portfolios generally do so in order to:

A. have a relatively low-risk investment vehicle

B. Own an investment that historically is very stable

C. have a hedge against inflation

D. own an investment that does not have any transaction costs