Which of the Following Statements Is Correct

question 15

Multiple Choice

Which of the following statements is correct?

• A)A stock's price will increase upon announcing a dividend.
• B)Stock repurchases increase the number of shares.
• C)Paying a fixed percentage of net income is consistent with the clientele effect.
• D)None of these.

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Definitions:

Accounting Equation

The foundational principle of double-entry bookkeeping, stating that assets equal liabilities plus shareholders' equity.

Components

Elements or parts that combine to form a larger product or system.

Net Profit Margin Ratio

A profitability metric that shows the percentage of revenue that remains as net income after all expenses have been deducted.

Net Income

The total earnings of a company after accounting for all expenses and taxes, reflecting the company's profitability.