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:

Conventions

General agreement about terms and/or practices.

Interpretation

A way of understanding, a view of a set of facts, from a certain perspective.

Universal Causality

The philosophical concept that every event or action results from preceding events in accordance with the laws of nature.

Equal and Opposite Reaction

Newton's third law of motion, which states that for every action, there is an equal and opposite reaction.