Which of the Following Statements Is CORRECT

question 26

Multiple Choice

Which of the following statements is CORRECT?

• A) If a company has a 2-for-1 stock split, its stock price should roughly double.
• B) Capital gains earned in a share repurchase are taxed less favorably than dividends; this explains why companies typically pay dividends and avoid share repurchases.
• C) Very often, a company's stock price will rise when it announces that it plans to commence a share repurchase program. Such an announcement could lead to a stock price decline, but this does not normally happen.
• D) Stock repurchases increase the number of outstanding shares.
• E) The clientele effect is the best explanation for why companies tend to vary their dividend payments from quarter to quarter.

---

Definitions:

Semantic Network

A conceptual model in cognitive psychology and artificial intelligence that represents semantic relations between concepts in networks.

Prospective Memory

The aspect of memory that involves remembering to perform a planned action or recall a planned intention at some future point in time.

Semantic Encoding

The process of encoding information according to its meaning to help in its retention and retrieval from memory.

Visualizing

Visualizing involves forming mental images or concepts, often used as a technique in problem-solving, learning, and goal setting.