Which One of the Following Statements Is Correct

question 24

Multiple Choice

Which one of the following statements is correct?

• A)Firms prefer to cut dividend payments rather than borrow money to fund a short-term cash need.
• B)Share repurchases tend to increase agency costs.
• C)Maintaining a steady dividend is a key goal of most dividend-paying firms.
• D)Tax rates are the key factor in determining a firm's dividend policy.
• E)Stock prices tend to ignore expected changes in dividend payments.

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Definitions:

Orange Crop

The yield of orange trees harvested in a particular area during a single growing season.

Cold Spell

A period of unusually cold weather relative to the expected conditions for a certain time of year.

Supply

The total amount of a product or service available for purchase at any given time.

Equity Funds

Investment funds that primarily invest in stocks, aiming to provide investors with growth or income.