Which of the Following Statements Is Correct

question 8

Multiple Choice

Which of the following statements is correct?

• A) The current Canadian tax law encourages companies to pay dividends rather than retain earnings.
• B) If a company uses the residual dividend model to determine its dividend payments, dividends payout will tend to increase whenever the company's profitable investment opportunities increase.
• C) The stronger management thinks the clientele effect is, the more likely the firm is to adopt a strict version of the residual dividend model.
• D) Large stock repurchases financed by debt tend to increase earnings per share, but they also increase the firm's financial risk.

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Definitions:

Unemployment Rates

The share of the working population that is not employed but is in active pursuit of employment.

Improvements in Technology

Advances or upgrades in technological systems, processes, or products, leading to increased efficiency, productivity, or new capabilities.

Per-Worker Production Function

A mathematical representation of the output produced per worker, based on factors like technology and capital.

Diminishing Slope

usually refers to the principle of diminishing returns in economics, where the rate of return or yield decreases as more input is added.