Which of the Following Statements Is NOT CORRECT

question 36

Multiple Choice

Which of the following statements is NOT CORRECT?

• A) Stock repurchases can be used by a firm as part of a plan to change its capital structure.
• B) After a 3-for-1 stock split,a company's price per share should fall,but the number of shares outstanding will rise.
• C) Investors may interpret a stock repurchase program as a signal that the firm's managers believe the stock is undervalued,or,alternatively,as a signal that the firm does not have many good investment opportunities.
• D) A company can repurchase stock to distribute a large one-time cash inflow,say from the sale of a division,to stockholders without having to increase its regular dividend.
• E) Stockholders pay no income tax on dividends if the dividends are used to purchase stock through a dividend reinvestment plan.

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Definitions:

Total Losses

The complete financial loss amount suffered by an entity, typically used in insurance when referring to a loss where the insured item is totally damaged or destroyed.

Security Guards

Personnel employed to protect property, assets, or people, often found in various establishments or public areas.

Substitution Effect

The change in consumption patterns due to a change in relative prices, leading consumers to substitute one good for another more or less expensive one.

Firms

Business organizations that produce goods or offer services, typically with the aim of generating profit.