Which of the Following Statements Is CORRECT

question 45

Multiple Choice

Which of the following statements is CORRECT?

• A) If a firm repurchases some of its stock in the open market,then shareholders who sell their stock for more than they paid for it will be subject to capital gains taxes.
• B) An open-market dividend reinvestment plan will be most attractive to companies that need new equity and would otherwise have to issue additional shares of common stock through investment bankers.
• C) Stock repurchases tend to reduce financial leverage.
• D) If a company declares a 2-for-1 stock split,its stock price should roughly double.
• E) One advantage of adopting the residual dividend model is that this makes it easier for corporations to meet the requirements of Modigliani and Miller's dividend clientele theory.

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Definitions:

Moderately Intoxicated

A state of inebriation where an individual's cognitive, motor, and perceptual abilities are notably impaired, but not to the extreme.

Alcohol

A chemical substance found in beverages such as beer, wine, and spirits, known to alter consciousness and affect bodily functions.

Behavior

The actions or reactions of an individual, usually in relation to the environment or context.

Alcohol Consumption

The act of drinking beverages containing ethyl alcohol, which can have various social, cultural, and personal implications.