Which of the Following Statements Is Correct

question 13

Multiple Choice

Which of the following statements is correct?

• A) one advantage of the residual dividend policy is that it leads to a stable dividend payout, which investors like.
• B) an increase in the stock price when a company decreases its dividend is consistent with signaling theory as postulated by mm.
• C) if the "clientele effect" is correct, then for a company whose earnings fluctuate, a policy of paying a constant percentage of net income will probably maximize the stock price.
• D) stock repurchases make the most sense at times when a company believes its stock is undervalued.
• E) firms with a lot of good investment opportunities and a relatively small amount of cash tend to have above average payout ratios.

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Definitions:

Rural Populations

Communities or groups of individuals living in areas characterized by low population density and geographic distance from urban centers.

Alienation

A condition of feeling isolated, disconnected, or estranged from others or from society as a whole.

Modernization

A process of social and cultural change that is initiated by industrialization and followed by increased social differentiation and division of labor.

Culture Lag

The phenomenon wherein certain parts of a culture may evolve more rapidly than others, leading to social conflicts and mismatches between technology and societal norms.