Which of the Following Statements Is Correct

question 57

Multiple Choice

Which of the following statements is correct?

• A) 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.
• B) Stock repurchases tend to reduce financial leverage.
• C) If a company declares a 2-for-1 stock split, its stock price should roughly double.
• D) 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.
• E) 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.

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Definitions:

Mere Exposure Effect

A psychological phenomenon where individuals develop a preference for things or people they are exposed to frequently.

Aesthetically Pleasing

Describes objects or experiences that are perceived as beautiful or pleasurable through sensory perception.

Job Interview

A formal conversation between a job applicant and a representative of an employer which is conducted to assess whether the applicant should be hired.

Repetition

The act of doing or saying something again multiple times, often for learning, emphasis, or effect.