Which of the Following Statements Is CORRECT

question 14

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 policy 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:

Connectionist Process

A cognitive science theory where mental phenomena are described in terms of interconnected networks of simple and often uniform units.

Working Memory

An intellectual mechanism with constrained capabilities tasked with momentarily retaining data for processing purposes.

Baddeley's View

Refers to Alan Baddeley's model of working memory, which suggests it consists of multiple components, including the phonological loop, visuospatial sketchpad, episodic buffer, and central executive.

Retroactive Interference

A memory phenomenon where newer information interferes with the ability to recall older information.