Which of the Following Statements Is Correct

question 30

Multiple Choice

Which of the following statements is correct?

• A)If a firm follows the residual dividend policy, then a sudden increase in the number of profitable projects is likely to reduce the firm's dividend payout.
• B)The clientele effect can explain why so many firms change their dividend policies so often.
• C)One advantage of adopting the residual dividend policy is that this policy makes it easier for corporations to develop a specific and well-identified dividend clientele.
• D)New-stock dividend reinvestment plans are similar to stock dividends because they both increase the number of shares outstanding but don't change the firm's total amount of book equity.

---

Definitions:

Psychic Energy

In psychoanalytic theory, the energy produced by instinctual drives and libido, considered the driving force behind human behavior and mental processes.

Conflicting Emotions

Experiencing two or more opposing emotions at the same time, leading to feelings of discomfort or confusion.