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:

Federal Cost Sharing

A financial arrangement where costs of a specific program or project are divided between the federal government and state or local governments, or other entities.

Canada Health Act

A piece of Canadian federal legislation that sets conditions and criteria provinces and territories must meet to receive federal cash contributions for health care.

Accessibility

Residents of a province or territory must have reasonable access to insured services.

Specialization Of Services

refers to the practice of focusing resources and skills in a specific area of expertise, leading to increased efficiency and quality in service delivery.