Which of the Following Statements Is CORRECT

question 45

Multiple Choice

Which of the following statements is CORRECT?

• A) If a firm repurchases some of its stock in the open market,then shareholders who sell their stock for more than they paid for it will be subject to capital gains taxes.
• B) An open-market dividend reinvestment plan will be most attractive to companies that need new equity and would otherwise have to issue additional shares of common stock through investment bankers.
• C) Stock repurchases tend to reduce financial leverage.
• D) If a company declares a 2-for-1 stock split,its stock price should roughly double.
• E) One advantage of adopting the residual dividend model is that this makes it easier for corporations to meet the requirements of Modigliani and Miller's dividend clientele theory.

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Definitions:

Cro-Magnons

Early modern humans that lived in Europe approximately 40,000 to 10,000 years ago, known for their sophisticated tools and art.

Spears

Long-shafted weapons with a pointed tip, typically used for thrusting or throwing.

Environment

The surrounding conditions, influences, and natural life in which a person, animal, or plant lives and operates.

Living Lineages

Sequences of living organisms that are descended from a common ancestor, showcasing the path of evolution.