Which of the Following Statements Is CORRECT

question 50

Multiple Choice

Which of the following statements is CORRECT?

• A) Under the tax laws as they existed in 2011, a dollar received by an individual taxpayer as interest income is taxed at the same rate as a dollar received as dividends.
• B) One nice feature of dividend reinvestment plans (DRIPs) is that they reduce the taxes investors would have to pay if they received cash dividends.
• C) Empirical research indicates that, in general, companies send a negative signal to the marketplace when they announce an increase in the dividend. As a result, share prices fall when dividend increases are announced because investors interpret the increase as a signal that the firm expects fewer good investment opportunities in the future.
• D) If a company needs to raise new equity capital, a new-stock dividend reinvestment plan would make sense. However, if the firm does not need new equity, then an open market purchase dividend reinvestment plan would probably make more sense.
• E) Dividend reinvestment plans have not caught on in most industries, and today over 99% of all DRIPs are offered by utilities.

---

Definitions:

Dynamic Power Shifting

The continuous change in the distribution of power among individuals or groups within a particular context or over time.

Constant Infighting

Ongoing, persistent conflicts or struggles for power within a group, organization, or institutional setting, often hindering progress or unity.

External Task Action

A strategy or measure taken outside the routine tasks to achieve a specific goal or to enhance performance.

Internal Relational Action

Actions focused within an organization aimed at fostering positive, cooperative relationships among its members.