Major medical insurance protects against the high costs of serious illness

The rights and benefits accruing to the company belong to the company, not to its owners

Indicate whether the statement is true or false

How does Jensen's free cash flow hypothesis relate to a firm's dividend policy?

a. Dividends discipline management by forcing free cash flow to be disgorged to shareholders, thus mitigating management's tendency to engage in empire building. b. Dividends act as a signal of firm value. c. Dividends solve the principal-agent problem between shareholders and creditors. d. Dividends solve the underinvestment problem.