Which of the Following Statements Is Correct

question 112

Multiple Choice

Which of the following statements is correct?

• A) A key advantage of the residual dividend policy is that it usually results in a stable dividend policy which is attractive to investors.
• B) Investors should prefer that a corporation repurchase its common stock when the stock is overpriced.
• C) A reduction in the capital gains rate should work to discourage corporations from repurchasing their shares.
• D) The theory that investors prefer dividends rather than capital gains suggests that firms that increase their dividend payout should expect to realize a higher share price and a lower cost of equity capital.
• E) Answers c and d are both correct.

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Definitions:

Fovea

A small depression in the retina of the eye where visual acuity is highest, due to the concentration of cones, specialized for daylight vision, fine detail, and color.

Cones

Photoreceptor cells in the retina of the eye that function best in relatively bright light and enable the perception of color.

Rods

Photoreceptor cells in the retina of the eye that are responsible for vision in low light conditions.

Nonspectral Colors

Colors that do not appear in the visible spectrum and are perceived through the combination of two or more wavelengths, such as pink or brown.