Which of the Following Statements Is FALSE

question 91

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:

Cost Centers

Parts of an organization to which costs can be allocated, but which do not directly generate revenues.

Operating Expenses

Costs incurred during the normal functioning of a business, excluding the cost of goods sold.

Support Departments

Units within an organization that provide essential services to other departments or divisions but do not directly produce revenue.

Profit Center

A decentralized unit in which the manager has the responsibility and the authority to make decisions that affect both costs and revenues (and thus profits).