Which One of the Following Statements Is Correct

question 38

Multiple Choice

Which one of the following statements is correct?

• A)Dividends are irrelevant.
• B)Flotation costs are a good reason to support a high-dividend payout.
• C)Current tax laws favor high current dividends for individual investors.
• D)Dividend policy is the time pattern of dividend payout.
• E)Corporate investors tend to prefer low-dividend payouts on securities they own.

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Definitions:

Reserves

Typically refers to deposits that banks hold at the central bank plus the cash in vaults, or to the quantities of a resource (like oil or gold) that are known to be available.

Cash

Money in the form of notes and coins, representing immediate purchasing power and liquidity.

Bank Vaults

Secure rooms where banks and other financial institutions store money, valuable documents, and other assets.

Fed

Short for the Federal Reserve, the central banking system of the United States, which regulates the U.S. monetary and financial system.