Which of the Following Statements Is Most Correct

question 17

Multiple Choice

Which of the following statements is most correct?

• A) One advantage of stock repurchases is that they are generally taxed more favorably than dividend payments.
• B) One advantage of dividend reinvestment plans is that they enable investors to avoid paying taxes on the dividends they receive.
• C) Stock repurchases make sense if a company is interested in increasing its equity ratio.
• D) Stock repurchases make sense if a company believes that its stock is overvalued and that it has a lot of profitable projects to fund over the next year.
• E) One advantage of an open market dividend reinvestment plan is that it increases the number of shares the company has outstanding.

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Definitions:

Big Five Model

A theory in psychology that identifies five broad dimensions of personality: Openness, Conscientiousness, Extraversion, Agreeableness, and Neuroticism.

Neuroticism

A personality trait characterized by anxiety, fear, moodiness, worry, envy, frustration, jealousy, and loneliness.

Conscientiousness

A personality trait characterized by organization, dependability, and a strong sense of duty.

Agreeableness

A personality trait characterized by warmth, friendliness, and a cooperative attitude towards others.