Which of the Following Statements Is CORRECT

question 30

Multiple Choice

Which of the following statements is CORRECT?

• A)One disadvantage of dividend reinvestment plans is that they increase transactions costs for investors who want to increase their ownership in the company.
• B)One advantage of dividend reinvestment plans is that they enable investors to postpone paying taxes on the dividends credited to their account.
• C)Stock repurchases can be used by a firm that wants to increase its debt ratio.
• D)Stock repurchases make sense if a company expects to have a lot of profitable new projects to fund over the next few years, provided investors are aware of these investment opportunities.
• E)One advantage of an open market dividend reinvestment plan is that it provides new equity capital and increases the shares outstanding.

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Definitions:

Marketing Environment

The external factors that affect a company's ability to engage and transact with its targeted customers, including social, economic, technological, competitive, and regulatory forces.

World Trade Organization

An international organization that regulates trade rules between nations to ensure trade flows smoothly, predictably, and as freely as possible.

Marrakech Agreement

An agreement that established the World Trade Organization (WTO), aimed at facilitating global trade.

Currency Fluctuations

Variations in the value of a currency in the foreign exchange market, affecting the cost of imports and exports among countries.