Which Statement Is True Regarding Dividend Reinvestment Plans

question 16

Multiple Choice

Which statement is true regarding dividend reinvestment plans?

• A)They were introduced after the introduction of the imputation system.
• B)They do not allow tax credits to be transferred to shareholders.
• C)They allow shareholders to purchase additional shares without incurring transaction costs.
• D)They allow shareholders to purchase additional shares without a discount.

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Definitions:

Output

The total amount of goods or services produced by a company, industry, or economy over a certain period.

Constant Returns To Scale

Long-run average total cost is constant as output increases.

Long-Run Average Total Cost

The average cost per unit of output when all inputs, including those typically fixed, are variable and optimized.

Variable Cost

Costs that vary directly with the level of production or output, such as materials and labor, in contrast to fixed costs, which remain constant regardless of output levels.