Which of the Following Statements Is Most Correct

question 4

Multiple Choice

Which of the following statements is most correct?

• A) If a company puts in place a 2-for-1 stock split, its stock price should roughly double.
• B) Share repurchases are taxed less favorably than dividends; this explains why companies typically pay dividends and avoid share repurchases.
• C) On average, a company's stock price tends to rise when it announces that it is initiating a share repurchase program.
• D) Statements a and b are correct.
• E) All of the statements above are correct.

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Definitions:

Direct Labor Rate

The cost of the work done by those employees who directly manufacture the products, usually measured per hour.

Direct Materials Cost

The expense associated with acquiring raw materials that are directly utilized in the manufacture of goods.

Traditional Costing

Traditional costing is an accounting method that allocates manufacturing overhead based on volume-related measures, such as direct labor hours or machine hours.

Production Orders

Instructions for manufacturing a certain number of products, detailing the materials, components, and assembly or production processes required.