Which of the Following Statements Is Correct

question 41

Multiple Choice

Which of the following statements is correct?

• A) if a company uses the residual dividend model to determine its dividend payments, dividends payout will tend to increase whenever its profitable investment opportunities increase.
• B) the stronger management thinks the clientele effect is, the more likely the firm is to adopt a strict version of the residual dividend model.
• C) large stock repurchases financed by debt tend to increase earnings per share, but they also increase the firm's financial risk.
• D) a dollar paid out to repurchase stock is taxed at the same rate as a dollar paid out in dividends. thus, both companies and investors are indifferent between distributing cash through dividends and stock repurchase programs.
• E) the tax code encourages companies to pay dividends rather than retain earnings.

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Definitions:

Small Intestine

A part of the gastrointestinal tract between the stomach and large intestine that absorbs nutrients and minerals from food.

Cholecystokinin (CCK)

A chemical that promotes the breakdown of fats and proteins for digestion.

Small Intestine

A part of the gastrointestinal tract between the stomach and large intestine that digests food and absorbs nutrients.

Transverse Mesocolon

Fold of peritoneum attaching the transverse colon to the posterior abdominal wall.