Which of the Following Statements Is False

question 66

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 earnings 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:

Predict

To declare or indicate an event, condition, or result in the future, typically based on observation, experience, or scientific reasoning.

Representative Sample

A smaller portion of a population that accurately represents the characteristics of the whole population.

Residents

Individuals who inhabit a particular place or locality, usually implying a degree of permanence.

Population

The entire group of individuals or instances about whom data is collected, typically in statistical analysis and research.