Which of the Following Statements Is False

question 28

Multiple Choice

Which of the following statements is false?

• A) The total payout model allows us to ignore the firm's choice between dividends and share repurchases.
• B) By repurchasing shares, the firm increases its share count, which decreases its earning and dividends on a per-share basis.
• C) The total payout model discounts the total payouts that the firm makes to shareholders, which is the total amount spent on both dividends and share repurchases.
• D) In the dividend discount model we implicitly assume that any cash paid out to the shareholders takes the form of a dividend.

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Definitions:

Illusory Correlation

The belief in a connection between two factors where none actually exists.

Decline Effect

The phenomenon where the strength of a scientific finding or the size of observed effects tends to decrease over time with subsequent studies or experiments.

Physical Height

The measurement of how tall an individual or structure is, typically measured from the base to the top.

Correlation

An indicator quantifying the degree to which multiple variables co-vary.