Which of the Following Statements Is Correct

question 15

Multiple Choice

Which of the following statements is correct?

• A)A stock's price will increase upon announcing a dividend.
• B)Stock repurchases increase the number of shares.
• C)Paying a fixed percentage of net income is consistent with the clientele effect.
• D)None of these.

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Definitions:

Price Effect

The impact on the quantity demanded of a good or service resulting from a change in its price, holding all other factors constant.

Quantity Effect

The change in quantity demanded or supplied of a good or service due to a change in its price.

Price-elastic Demand

A situation where the quantity demanded of a good or service significantly changes in response to changes in its price.

Total Revenue

Total revenue is the total amount of money received by a company from sales of its goods or services before any expenses are subtracted.