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:

Distance Cue

A visual indicator in an environment that helps to gauge the distance between the observer and objects within that environment.

Artist's Canvas

A woven fabric, typically made from cotton or linen, stretched over a frame and used as a surface for painting.

Binocular Cue

A depth cue that requires the use of both eyes, such as stereopsis, which allows for the perception of depth and 3D structure from visual information.

Retinal Disparity

The difference in visual images that each eye perceives because of the eyes' different angles, providing a cue to depth perception.