Which of the Following Statements Is Correct

question 5

Multiple Choice

Which of the following statements is correct?

• A) the clientele effect can explain why so many firms change their dividend policies so often.
• B) one advantage of adopting the residual dividend policy is that this policy makes it easier for corporations to develop a specific and well-identified dividend clientele.
• C) new-stock dividend reinvestment plans are similar to stock dividends because they both increase the number of shares outstanding but don't change the firm's total amount of book equity.
• D) investors who receive stock dividends must pay taxes on the value of the new shares in the year the stock dividends are received.
• E) if a firm follows the residual dividend policy, then a sudden increase in the number of profitable projects is likely to reduce the firm's dividend payout.

---

Definitions:

Males Compete

A behavioral aspect in many species where male individuals vie for access to resources or mates, influencing sexual selection.

Spear-Like Organ

An anatomical feature resembling a spear, often used in the context of certain animals for hunting, defense, or feeding.

Sexual Arms Race

The evolutionary battle between males and females of a species, where one sex evolves a feature for reproductive advantage and the other sex evolves countermeasures.

Selection Pressure

Environmental or social forces that influence the survival and reproductive success of an organism, driving evolutionary changes.