Which of the Following Statements Is Most Correct

question 31

Multiple Choice

Which of the following statements is most correct?

• A) An open-market dividend reinvestment plan is likely to be attractive to companies that are looking to issue additional shares of common stock.
• B) Stock repurchases have the effect of reducing financial leverage.
• C) If a company does a 2-for-1 stock split, its stock price will roughly double.
• D) All of the answers above are correct.
• E) None of the answers above is correct.

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Definitions:

Unit Sales Price

The amount that a business charges for one unit of its product or service.

High-Low Method

A technique used in cost accounting to estimate variable and fixed costs based on the highest and lowest levels of activity.

Variable Cost Element

A cost that varies directly with the level of production or sales volume, such as materials and direct labor.

Fixed Cost Element

The portion of total costs that does not change with the variation in activity level or production volume.