Under the Idealized Conditions of MM,which Statement Is Correct When

question 109

Multiple Choice

Under the idealized conditions of MM,which statement is correct when a firm issues new stock in order to pay a cash dividend on existing shares?

• A) The new shares are worth less than the old shares.
• B) The old shares drop in value to equal the new price.
• C) The value of the firm is reduced by the amount of the dividend.
• D) The value of the firm is unaffected.

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Definitions:

Hydrogen Ions

Positively charged atoms of hydrogen, which contribute to acidity when present in high concentrations in solutions.

Acids

Substances that release hydrogen ions (H+) when dissolved in water, typically having a sour taste and capable of turning blue litmus paper red.

Bases

Chemical substances that can accept hydrogen ions (H+) and are characterized by a pH greater than 7 when dissolved in water.

Hydrophilic

Describing molecules or substances that have a natural affinity for water and can dissolve in or absorb water easily.