Which of the Following Statements Is Correct

question 9

Multiple Choice

Which of the following statements is correct?

• A) one advantage of dividend reinvestment plans is that they enable investors to postpone paying taxes on the dividends credited to their account.
• B) stock repurchases can be used by a firm that wants to increase its debt ratio.
• C) stock repurchases make sense if a company expects to have a lot of profitable new projects to fund over the next few years, provided investors are aware of these investment opportunities.
• D) one advantage of an open market dividend reinvestment plan is that it provides new equity capital and increases the shares outstanding.
• E) one disadvantage of dividend reinvestment plans is that they increase transactions costs for investors who want to increase their ownership in the company.

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Definitions:

National Defense

Public or governmental efforts to protect a country and maintain national security through armed forces and defense strategies.

Federal Spending

Expenditures by the federal government on programs, services, and operations, including everything from military funding to social security benefits.

Income in Taxes

refers to the portion of individuals' or businesses' earnings that is paid to the government as tax.

Corporate Income Taxes

Taxes imposed on the income or profit of corporations by the government.