Which of the Following Statements Is Correct

question 48

Multiple Choice

Which of the following statements is correct?

• A) if a company has an established clientele of investors who prefer a high dividend payout, and if management wants to keep stockholders happy, it should not follow the strict residual dividend policy.
• B) if a firm follows a strict residual dividend policy, then, holding all else constant, its dividend payout ratio will tend to rise whenever the firm's investment opportunities improve.
• C) if congress eliminates taxes on capital gains but leaves the personal tax rate on dividends unchanged, this would motivate companies to increase their dividend payout ratios.
• D) despite its drawbacks, following the residual dividend policy will tend to stabilize actual cash dividends, and this will make it easier for firms to attract a clientele that prefers high dividends, such as retirees.
• E) one advantage of dividend reinvestment plans is that they enable investors to avoid paying taxes on the dividends they receive.

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Definitions:

Physiologically

Pertaining to the functions and processes of the body's systems and organs.

Johari Window

A model used to improve understanding between individuals within a team or group, involving self-disclosure and feedback to and from others.

Blind Area

Part of Johari window model, it represents information that others know about a person but the person is unaware of.

Micromanagement

A management style characterized by excessive control or attention to minor details, often to the detriment of overall performance and morale.