Which of the Following Statements Is CORRECT

question 45

Multiple Choice

Which of the following statements is CORRECT?

• A) If a firm repurchases some of its stock in the open market,then shareholders who sell their stock for more than they paid for it will be subject to capital gains taxes.
• B) An open-market dividend reinvestment plan will be most attractive to companies that need new equity and would otherwise have to issue additional shares of common stock through investment bankers.
• C) Stock repurchases tend to reduce financial leverage.
• D) If a company declares a 2-for-1 stock split,its stock price should roughly double.
• E) One advantage of adopting the residual dividend model is that this makes it easier for corporations to meet the requirements of Modigliani and Miller's dividend clientele theory.

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Definitions:

Scorched Earth Policy

A military strategy that involves destroying anything that might be useful to the enemy while advancing through or withdrawing from an area.

Kit Carson

An American frontiersman and soldier who played a key role in the westward expansion of the United States, but whose actions also contributed to the displacement of Native American tribes.

Navajos

are a Native American people of the Southwestern United States, known for their rich cultural traditions, art, especially weaving, and their history of resilience and sovereignty.