Which of the Following Statements Is CORRECT

question 28

Multiple Choice

Which of the following statements is CORRECT?

• A) If a firm follows the residual dividend model,then a sudden increase in the number of profitable projects would be likely to lead to a reduction of the firm's dividend payout ratio.
• B) The clientele effect explains why so many firms change their dividend policies so often.
• C) One advantage of adopting the residual dividend model is that this policy makes it easier for a corporation to attract a specific and well-identified dividend clientele.
• D) New-stock dividend reinvestment plans are similar to stock dividends because they both increase the number of shares outstanding but don't change the firm's total amount of book equity.
• E) Investors who receive stock dividends must pay taxes on the value of the new shares in the year the stock dividends are received.

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Definitions:

Organizational Ethics

A set of guiding principles and values that dictate the behavior and decision-making within an organization.

Ethical Intention

The deliberate aim or plan to act according to ethical principles and values, often involving considerations of fairness, honesty, and respect for others.

Organizational Culture

The collective behavior, values, practices, and beliefs that characterize an organization and influence its members.

Corporate Culture

The shared values, beliefs, and behaviors that determine how a company's employees and management interact and handle outside business transactions.