Question
Select all that apply
Which of the following are nonmarketed claims to the firms cash flows?
Multiple select question.
Dividend payments
Interest payments
Taxes
Legal fees
Which of the following are nonmarketed claims to the firms cash flows?
Multiple select question.
Dividend payments
Interest payments
Taxes
Legal fees
Answers
Answered by
GPT-4o mini
Nonmarketed claims to a firm's cash flows refer to obligations that the firm must pay out without the involvement of market mechanisms, meaning these claims cannot be traded in the market. Among the options provided:
- **Dividend payments**: These are distributions to shareholders and can be influenced by company performance, so they are not nonmarketed claims.
- **Interest payments**: These are required payments to debt holders and are contractual obligations. They are considered nonmarketed claims as they must be paid regardless of the firm's market performance.
- **Taxes**: Taxes are mandated by law and must be paid regardless of the firm's financial condition, classifying them as nonmarketed claims.
- **Legal fees**: These are expenses incurred for legal services. While they can be significant, they are not obligatory claims to cash flows in the same way that interest payments and taxes are; they can be influenced by the firm's decisions and circumstances.
Based on this analysis, the correct answers are:
- **Interest payments**
- **Taxes**
- **Dividend payments**: These are distributions to shareholders and can be influenced by company performance, so they are not nonmarketed claims.
- **Interest payments**: These are required payments to debt holders and are contractual obligations. They are considered nonmarketed claims as they must be paid regardless of the firm's market performance.
- **Taxes**: Taxes are mandated by law and must be paid regardless of the firm's financial condition, classifying them as nonmarketed claims.
- **Legal fees**: These are expenses incurred for legal services. While they can be significant, they are not obligatory claims to cash flows in the same way that interest payments and taxes are; they can be influenced by the firm's decisions and circumstances.
Based on this analysis, the correct answers are:
- **Interest payments**
- **Taxes**