Boston Free Press Has a Dividend Policy Whereby the Firm

Multiple Choice

Boston Free Press has a dividend policy whereby the firm pays a constant annual dividend of $2.40 per share of common stock. The firm has 1,000 shares of stock outstanding. The company:

A) must always show a current liability of $2,400 for dividends payable.
B) must still declare each dividend before it becomes an actual company liability.
C) is obligated to pay $2.40 per share each year in perpetuity.
D) will be declared in default if it does not pay at least $2.40 per share per year on a timely basis.
E) incurs a liability that must be paid at a later date should the company miss paying an annual dividend payment.