Which of the Following Statements Is CORRECT

question 26

Multiple Choice

Which of the following statements is CORRECT?

• A) If a company has a 2-for-1 stock split,its stock price should roughly double.
• B) Capital gains earned on shares repurchased are taxed less favorably than dividends,which is why companies typically pay dividends and avoid share repurchases.
• C) Very often,a company's stock price will rise when it announces that it plans to commence a share repurchase program.Such an announcement could lead to a stock price decline,but this does not normally happen.
• D) Stock repurchases increase the number of outstanding shares.
• E) The clientele effect is the best explanation for why companies tend to vary their dividend payments from quarter to quarter.

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Definitions:

Enormous Institution

A large and significant organization or establishment, often influential in its field or society at large.

Government Action

Measures or interventions undertaken by a government to address issues, implement policies, or affect societal conditions.

Liberty

is a fundamental principle referring to the freedom of individuals to act and express themselves freely, so long as they do not infringe on the rights of others.

Equality

The state of being equal, especially in status, rights, and opportunities.