Which of the Following Statements Is FALSE

question 65

Multiple Choice

Which of the following statements is FALSE?

• A)In perfect capital markets,holding fixed the investment policy of a firm,the firm's choice of dividend policy is irrelevant and does not affect the initial share price.
• B)In a perfect capital market,when a dividend is paid,the share price drops by the amount of the dividend when the stock begins to trade ex-dividend.
• C)In perfect capital markets,an open market share repurchase has no effect on the stock price,and the stock price is the same as the ex-dividend price if a dividend were paid instead.
• D)In perfect capital markets,investors are indifferent between the firm distributing funds via dividends or share repurchases.By reinvesting dividends or selling shares,they can replicate either payout method on their own.

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Definitions:

Bronchioles

A part of the respiratory tract that branches from the tertiary bronchi.

Pleura

The membranes that surround the lungs.

Cilia

Microscopic, hair-like structures on the surface of cells that move in a wavelike manner to transport substances or facilitate movement.

Epiglottis

A leaf-shaped flap of cartilage located behind the tongue, at the top of the larynx, which prevents food and drink from entering the windpipe during swallowing.