Which of the Following Statements Is CORRECT

question 15

Multiple Choice

Which of the following statements is CORRECT?

• A)Under the tax laws as they existed in 2014, a dollar received by an individual taxpayer as interest income is taxed at the same rate as a dollar received as dividends.
• B)One nice feature of dividend reinvestment plans (DRIPs) is that they reduce the taxes investors would have to pay if they received cash dividends.
• C)Empirical research indicates that, in general, companies send a negative signal to the marketplace when they announce an increase in the dividend. As a result, share prices fall when dividend increases are announced because investors interpret the increase as a signal that the firm expects fewer good investment opportunities in the future.
• D)If a company needs to raise new equity capital, a new-stock dividend reinvestment plan would make sense. However, if the firm does not need new equity, then an open market purchase dividend reinvestment plan would probably make more sense.
• E)Dividend reinvestment plans have not caught on in most industries, and today over 99% of all DRIPs are offered by utilities.

---

Definitions:

Secondary Education

The stage of education that follows primary education, typically including high school or equivalent levels.

Career Exploration

The process of researching, evaluating, and learning about various occupational opportunities to find a match for one’s interests and abilities.

Contemporary Definitions

Modern or current interpretations and meanings of concepts and terms.

Traditional Definitions

Conventional meanings or interpretations that have been accepted over time within a culture or community.