Which of the Following Statements Is Most Correct

question 42

Multiple Choice

Which of the following statements is most correct?

• A) The bird-in-the-hand theory implies that a company can reduce its WACC by reducing its dividend payout.
• B) The bird-in-the-hand theory implies that a company can increase its stock price by reducing its dividend payout.
• C) One problem with following a residual distribution policy (with all distributions in the form of dividends) is that it can lead to erratic dividend payouts that may prevent the firm from establishing a reliable clientele of investors who prefer a particular dividend policy.
• D) Statements a and c are correct.
• E) All of the statements above are correct.

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Definitions:

Magellan

Ferdinand Magellan was a Portuguese explorer who led the first expedition to circumnavigate the globe, proving the world was round and vast, and opening new navigation routes.

Circumnavigated

The act of traveling all the way around the world, either by ship, aircraft, or other means.

Protestant Reformation

A religious movement in the 16th century that led to the creation of Protestantism, challenging the practices and authority of the Roman Catholic Church.

European Rivalries

Competitive or adversarial relationships between European nations, historically leading to conflicts, wars, and political tensions.