Which of the Following Statements Is NOT CORRECT

question 36

Multiple Choice

Which of the following statements is NOT CORRECT?

• A) Stock repurchases can be used by a firm as part of a plan to change its capital structure.
• B) After a 3-for-1 stock split,a company's price per share should fall,but the number of shares outstanding will rise.
• C) Investors may interpret a stock repurchase program as a signal that the firm's managers believe the stock is undervalued,or,alternatively,as a signal that the firm does not have many good investment opportunities.
• D) A company can repurchase stock to distribute a large one-time cash inflow,say from the sale of a division,to stockholders without having to increase its regular dividend.
• E) Stockholders pay no income tax on dividends if the dividends are used to purchase stock through a dividend reinvestment plan.

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Definitions:

Accommodation

A cognitive process described by Piaget in which existing mental schemas are modified or new schemas are created to incorporate new information.

Schema

A cognitive framework or concept that helps organize and interpret information in the mind.

Old Schema

Pre-existing mental structures or frameworks that help individuals organize and interpret information, based on past experiences and knowledge.

Developmental Processes

The series of changes and growth that occur over the course of a living organism's life.