Assume There Are No Taxes or Imperfections

question 87

Multiple Choice

Assume there are no taxes or imperfections.Given this assumption, which one of the following statements is correct?

• A)A cash dividend has no effect on the market price of the payer's stock.
• B)A cash dividend decreases shareholder wealth.
• C)Stock repurchases decrease the market value per share.
• D)Both a cash dividend and a share repurchase increase a firm's PE ratio.
• E)A stock repurchase has the same effect on a firm's market value balance sheet as does a cash dividend.

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Definitions:

Discrimination

The unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, or sex.

Negative Reinforcement

A process in behavior modification that involves the removal of an unpleasant stimulus to increase the probability of a behavior being repeated.

Instinctive Drift

The tendency of an animal, even after learning, to revert to instinctual behaviors, interfering with conditioned responses.

Aversive Stimulus

A stimulus that is unpleasant or painful that causes an individual to avoid or change behavior.