Which of the Following Statements Is CORRECT

question 27

Multiple Choice

Which of the following statements is CORRECT?

• A) If a firm follows the residual dividend policy, then a sudden increase in the number of profitable projects is likely to reduce the firm's dividend payout.
• B) The clientele effect can explain why so many firms change their dividend policies so often.
• C) One advantage of adopting the residual dividend policy is that this policy makes it easier for corporations to develop a specific and well-identified dividend clientele.
• D) New-stock dividend reinvestment plans are similar to stock dividends because they both increase the number of shares outstanding but don't change the firm's total amount of book equity.

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Definitions:

Attention Span

The length of time a person can concentrate on a task without becoming distracted.

Formal Operational Stage

A stage in Piaget's theory of cognitive development where individuals develop the ability to think abstractly and logically.

Cognitive Development

Refers to the process through which individuals acquire and evolve their thinking skills, problem-solving abilities, and knowledge over time.

Logical Plan

A structured and reasoned approach to solving a problem or achieving a goal.