Assume There Are No Taxes or Imperfections

question 87

Multiple Choice

Assume there are no taxes or imperfections.Given this assumption, which one of the following statements is correct?

• A)A cash dividend has no effect on the market price of the payer's stock.
• B)A cash dividend decreases shareholder wealth.
• C)Stock repurchases decrease the market value per share.
• D)Both a cash dividend and a share repurchase increase a firm's PE ratio.
• E)A stock repurchase has the same effect on a firm's market value balance sheet as does a cash dividend.

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Definitions:

Rh Incompatibility

A condition during pregnancy where the blood types of the mother and the fetus are incompatible, potentially leading to serious complications.

Rh Antibodies

Are proteins in the blood that can react against Rh factor antigens on red blood cells, leading to pregnancy complications if there is an incompatibility between a mother and her fetus.

Pregnancy

The period of time during which a woman carries a developing embryo or fetus inside her uterus, typically lasting around 40 weeks from the last menstrual period.

Autism

A developmental disorder characterized by difficulties in social interaction, communication, and by restricted or repetitive patterns of thought and behavior.