Which of the Following Statements Is Most Correct

question 9

Multiple Choice

Which of the following statements is most correct?

• A) If the dividend irrelevance theory (which is associated with the names Modigliani and Miller) were exactly correct, and if this theory could be tested with "clean" data, then we would find, in a regression of dividend yield and capital gains, a line with a slope of -1.0.
• B) The tax preference and bird-in-the-hand theories lead to identical conclusions as to the optimal dividend policy.
• C) If a company raises its dividend by an unexpectedly large amount, the announcement of this new and higher dividend is generally accompanied by an increase in the stock price. This is consistent with the bird-in-the-hand theory, and Modigliani and Miller used these findings to support their position on dividend theory.
• D) If it could be demonstrated that a clientele effect exists, this would suggest that firms could alter their dividend payment policies from year to year to take advantage of investment opportunities without having to worry about the effects of changing dividends on capital costs.
• E) Each of the statements above is false.

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Definitions:

Client-Centered Therapy

A psychotherapeutic approach developed by Carl Rogers focusing on providing a supportive environment allowing clients to lead their own therapy process.

Nondirective

A therapeutic approach in which the counselor or therapist provides support and guidance but does not give direct advice or instructions to the client.

Insight Therapies

Insight Therapies focus on increasing a patient's awareness of underlying psychological problems and motivations to facilitate change and personal growth.

Psychological Health

A state of well-being where an individual realizes his or her own abilities, can cope with normal stresses of life, work productively, and contribute to the community.