Which Statement About Dividend Policies Is Correct

question 1

Multiple Choice

Which statement about dividend policies is correct?

• A)Stock splits, stock dividends, and reverse splits are all designed to make the firm's shares more appealing to the average investor.
• B)Dividend reinvestment plans are designed to aid in the distribution of stock dividends.
• C)The key advantage of a residual dividend policy is that it enables a company to follow a stable dividend policy.
• D)The main goal of the share repurchases is solely to avoid taxes for investors.

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Definitions:

Career Advancement

The process of gaining higher level positions, increased responsibility, and better compensation within one's profession over time.

Cash Flow

The total amount of money being transferred into and out of a business, determining its liquidity, operational efficiency, and financial health.

Cash-Flow Statement

A financial statement that provides aggregate data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.

Service Policies

Guidelines and procedures established by a business concerning the delivery of its services to customers.