Which of the Following Statements Is Most Correct

question 42

Multiple Choice

Which of the following statements is most correct?

• A) The bird-in-the-hand theory implies that a company can reduce its WACC by reducing its dividend payout.
• B) The bird-in-the-hand theory implies that a company can increase its stock price by reducing its dividend payout.
• C) One problem with following a residual distribution policy (with all distributions in the form of dividends) is that it can lead to erratic dividend payouts that may prevent the firm from establishing a reliable clientele of investors who prefer a particular dividend policy.
• D) Statements a and c are correct.
• E) All of the statements above are correct.

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Definitions:

Huge Appetite

An unusually large desire to consume food, which can be driven by physiological, psychological, or emotional factors.

Gain Weight

The process of increasing body mass through accumulation of fat, muscle, or other substances.

Set Point

A theoretical value in biology and psychology that the body or mind aims to maintain through various regulatory mechanisms.

Body Mass Index

A numerical computation that evaluates an individual's body weight in relation to their height, used to assess if their weight is in a healthy range.