Which of the Following Statements Is Correct

question 43

Multiple Choice

Which of the following statements is correct?

• A) One advantage of dividend reinvestment plans is that they enable investors to postpone paying taxes on the dividends credited to their account.
• B) Stock repurchases can be used by a firm that wants to increase its debt ratio.
• C) Stock repurchases make sense if a company expects to have a lot of profitable new projects to fund over the next few years, provided investors are aware of these investment opportunities.
• D) One advantage of an open market dividend reinvestment plan is that it provides new equity capital and increases the shares outstanding.
• E) One disadvantage of dividend reinvestment plans is that they increase transactions costs for investors who want to increase their ownership in the company.

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Definitions:

Hyperesthesia

An increased sensitivity to stimulation, particularly touch.

Summation Effect

The process where combined effects of multiple stimuli result in a greater response than the sum of their individual effects.

Analgesia

The absence of pain in response to stimulation which would normally be painful, often achieved through the use of medication.

Startle Response

A reflex reaction to sudden, unexpected stimuli, such as loud noises, characterized by sudden muscle contractions.