Which of the Following Statements Is Correct

question 30

Multiple Choice

Which of the following statements is correct?

• A) One advantage of dividend reinvestment plans is that they enable investors to avoid paying taxes on the dividends they receive.
• B) If a company has an established clientele of investors who prefer a high dividend payout, and if management wants to keep stockholders happy, it should NOT follow the strict residual dividend policy.
• C) If a firm follows a strict residual dividend policy, then, holding all else constant, its dividend payout ratio will tend to rise whenever the firm's investment opportunities improve.
• D) Despite its drawbacks, following the residual dividend policy will tend to stabilize actual cash dividends, and this will make it easier for firms to attract a clientele that prefers high dividends, such as retirees.

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Definitions:

Personal Beliefs

are the individual's convictions or principles that guide their thoughts and actions.

Brand Position

Brand position refers to a brand's unique standing and value proposition in the marketplace as perceived by customers, often in relation to its competitors.

Presenting Concern

The specific issue or problem that leads an individual to seek help from a professional, typically the focus of initial therapeutic efforts.

Referring Agent

An individual or entity that directs or recommends a person to another professional or service for further assistance.