Which of the Following Statements About Dividend Policies Is Correct

question 48

Multiple Choice

Which of the following statements about dividend policies is correct?

• A) One reason that companies tend to avoid stock repurchases is that dividend payments are taxed at a lower rate than gains on stock repurchases.
• B) One advantage of dividend reinvestment plans is that they allow shareholders to avoid paying taxes on the dividends that they choose to reinvest.
• C) One key advantage of a residual dividend policy is that it enables a company to follow a stable dividend policy.
• D) The clientele effect suggests that companies should follow a stable dividend policy.
• E) Modigliani and Miller argue that investors prefer dividends to capital gains because dividends are more certain than capital gains.They call this the "bird-in-the hand" effect.

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Definitions:

Antisocial Personality Disorder

An enduring mental disorder marked by repetitive actions that manipulate, exploit, or abuse others' rights.

Scammed

Being deceived or tricked into giving away personal information or money, often through fraudulent schemes or misleading promises.

Remorse

Remorse is a deep feeling of regret or guilt for a wrong committed.

Disordered

Often used to describe a state of confusion or lack of order; in a psychiatric context, it refers to an aberration from normal mental or behavioral patterns.