Which of the Following Statements Is Most Correct

question 40

Multiple Choice

Which of the following statements is most correct?

• A) The tax preference theory states that, all else equal, investors prefer stocks that pay low dividends because retained earnings can lead to capital gains that are taxed preferentially.
• B) An increase in the cost of equity capital (rs) when a company announces an increase in its dividend per share would be consistent with the bird-in-the-hand theory.
• C) An increase in the stock price when a company decreases its dividend is consistent with the signaling theory.
• D) A dividend policy that involves paying a consistent percentage of net income is the best policy if the "clientele effect" is correct.
• E) Both statements a and d are correct.

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Definitions:

Nicotine

A stimulant and potent parasympathomimetic alkaloid that is found in the nightshade family of plants and is widely used in cigarettes and other forms of tobacco.

Pulse Rates

A measure of the number of heartbeats per unit of time, usually expressed in beats per minute.

Exercise

Physical activity that is planned, structured, and repetitive, intended to improve or maintain physical fitness.

Smoking

The act of inhaling and exhaling the smoke of burning tobacco in cigars, cigarettes, or pipes.