Which of the Following Statements Is CORRECT

question 29

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 adhere strictly to the residual dividend model.
• C) If a firm adheres strictly to the residual dividend model,then,holding all else constant,its dividend payout ratio will tend to rise whenever its investment opportunities improve.
• D) If Congress eliminates taxes on capital gains but leaves the personal tax rate on dividends unchanged,this would motivate companies to increase their dividend payout ratios.
• E) Despite its drawbacks,following the residual dividend model 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:

Major Histocompatibility Complex

A set of genes that play a critical role in immune system function by helping the body recognize and differentiate between self and non-self antigens.

Biochemical Fingerprint

A unique pattern or profile of biochemical markers or traits that can be used to identify individuals or biological samples.

Body Cells

The basic structural, functional, and biological units of all known living organisms; cells make up the tissues of the body.

Antigens

Substances that the immune system recognizes as foreign, triggering an immune response.