Business, 20.12.2019 19:31, chrisayy

The free cash flow hypothesis states:

a. that firms with higher levels of free cash flow should reward their managers with bonuses.
b. that firms with greater free cash flow will pay more in dividends thereby reducing the risk of financial distress.
c. that issuing debt requires interest and principal payments to be paid thereby reducing the potential of management to waste resources.
d. that firms will higher levels of free cash flow should reduce their debt levels.
e. that firms with greater free cash flow should issue new equity to minimize the wasting of resources by managers.

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The free cash flow hypothesis states:

a. that firms with higher levels of free cash fl...