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:

Lumber Price

The cost per unit volume of wood, a key commodity in construction and manufacturing.

Housing Market

The supply and demand for houses, often analyzed in terms of availability, prices, interest rates, and affordability within an area.

Gasoline Prices

The cost per unit of gasoline, which can vary based on factors like oil prices, taxes, and supply and demand dynamics.

Sport Utility Vehicles

Large vehicles designed for off-road capacities while also offering on-road comfort and capability.