Which of the Following Are Valid Reasons for a Firm

Multiple Choice

Which of the following are valid reasons for a firm to reduce or eliminate its cash dividends?
I. The firm is on the verge of violating a bond restriction which requires a current ratio of 1.8 or higher.
II. A firm has just received a patent on a new product for which there is strong market demand and it needs the funds to bring the product to the marketplace.
III. The firm can raise new capital easily at a very low cost.
IV. The tax laws have recently changed such that dividends are taxed at an investor's marginal rate while capital gains are tax exempt.

A) I and III only
B) II and IV only
C) II, III, and IV only
D) I, II, and IV only
E) I, II, III, and IV