Which of the Following Statements Is Correct

question 19

Multiple Choice

Which of the following statements is correct?

• A)If a company has a 2-for-1 stock split, its stock price should roughly double.
• B)Capital gains earned in a share repurchase are taxed less favourably than dividends; this explains why companies typically pay dividends and avoid share repurchases.
• C)Very often, a company's stock price will rise when it announces that it plans to commence a share repurchase program. Such an announcement could lead to a stock price decline, but this does not normally happen.
• D)The clientele effect is the best explanation for why companies tend to vary their dividend payments from quarter to quarter.

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Definitions:

Representative Democracy

A form of government where citizens elect officials to represent their interests and make decisions on their behalf in the legislative process.

Private Business

A business entity owned and operated by private individuals, not controlled by the government, and aimed at earning profit.

Public Agencies

Government departments or organizations that operate within the public sector, providing services to the nation or a community.

Paradox Of Voting

A situation where the cost of voting (time, effort, etc.) outweighs the apparent individual benefit, questioning why rational individuals vote.