Which of the Following Statements Is Most Correct

question 16

Multiple Choice

Which of the following statements is most correct?

• A) Companies can repurchase shares either (1) to change their capital structures or (2) to distribute cash to stockholders without paying cash dividends. In the second situation, tax considerations will probably play a key role in the decision to repurchase stock versus to pay more cash dividends.
• B) Stock dividends provide investors with additional shares of stock, not cash, yet many investors must pay cash in the form of taxes on the value of the stock dividends. For this reason, stock dividends are rarely used today.
• C) The bird-in-the-hand theory of dividend policy could be rejected immediately if personal income taxes were abolished.
• D) If the curve relating the WACC and the debt ratio looks like a sharp 'V', this would make it more feasible for a firm to follow the residual dividend policy than if the curve looks like a shallow bowl (or a shallow 'U').
• E) The open market type of dividend reinvestment plan is the best type for firms that need to bring in new equity capital.

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Definitions:

Anxiety

A mental health disorder characterized by persistent worry, fear, or stress that interferes with daily functioning.

Self-Caregiving Pattern

Personal behaviors and practices that individuals follow to maintain health and well-being, involving activities of daily living and self-management of illnesses.

Standby Role

A supportive presence provided by an individual, often to offer assistance or intervention if necessary, while allowing the primary person to perform a task independently.

Share Activities

Engaging in tasks or recreational events with others to foster social connections or teamwork.