Which of the Following Statements Is CORRECT

question 26

Multiple Choice

Which of the following statements is CORRECT?

• A) If a company has a 2-for-1 stock split, its stock price should roughly double.
• B) Capital gains earned in a share repurchase are taxed less favorably than dividends; this explains why companies typically pay dividends and avoid share repurchases.
• C) Very often, a company's stock price will rise when it announces that it plans to commence a share repurchase program. Such an announcement could lead to a stock price decline, but this does not normally happen.
• D) Stock repurchases increase the number of outstanding shares.
• E) The clientele effect is the best explanation for why companies tend to vary their dividend payments from quarter to quarter.

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Definitions:

Gender Bias

The tendency to favor one gender over another, often resulting in unfair treatment or discrimination.

Psychotropic Medications

Drugs that affect the mind, emotions, and behaviors by altering brain function.

Mental Illness

Refers to a broad range of mental health conditions that affect mood, thinking, and behavior.

Sex-linked Biological Characteristics

Traits or characteristics that are determined by genes located on the sex chromosomes, commonly leading to differences between males and females.