Which of the Following Statements Is Correct

question 43

Multiple Choice

Which of the following statements is correct?

• A) One advantage of dividend reinvestment plans is that they enable investors to postpone paying taxes on the dividends credited to their account.
• B) Stock repurchases can be used by a firm that wants to increase its debt ratio.
• C) Stock repurchases make sense if a company expects to have a lot of profitable new projects to fund over the next few years, provided investors are aware of these investment opportunities.
• D) One advantage of an open market dividend reinvestment plan is that it provides new equity capital and increases the shares outstanding.
• E) One disadvantage of dividend reinvestment plans is that they increase transactions costs for investors who want to increase their ownership in the company.

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Definitions:

Federal Tax Dollars

Money collected by the government from the public through various taxes, used to fund government programs and services.

Cost-Benefit Analysis

An economic evaluation method where the benefits of an action or project are weighed against its costs.

Social Movements

Collective, organized efforts aiming to promote or resist change in the society with regard to specific issues.

Philosophical Analysis

Philosophical analysis is the method of breaking down ideas, statements, and concepts into simpler components for clarity, understanding, and examination of their logical foundations.