Which of the Following Statements Is CORRECT

question 42

Multiple Choice

Which of the following statements is CORRECT?

• A) Firms with a lot of good investment opportunities and a relatively small amount of cash tend to have above-average dividend payout ratios.
• B) One advantage of the residual dividend model is that it leads to a stable dividend payout,which investors like.
• C) An increase in the stock price when a company cuts its dividend is consistent with signaling theory as postulated by MM.
• D) If the "clientele effect" is correct,then for a company whose earnings fluctuate,a policy of paying a constant percentage of net income will probably maximize its stock price.
• E) Stock repurchases make the most sense at times when a company believes its stock is undervalued.

---

Definitions:

Hypothalamus

A region of the brain responsible for the production of many of the body's essential hormones, influencing hunger, thirst, sleep, and emotional activity.

Forebrain

The anterior part of the brain, including the cerebral hemispheres, thalamus, and hypothalamus, involved in complex behavioral and cognitive processes.

Reward

A positive outcome or reinforcement that follows a desired behavior, encouraging the repetition of that behavior in the future.

Hippocampus

A region of the brain that is associated with memory formation, especially in converting short-term memories to long-term ones, and spatial navigation.