Which of the Following Statements Is Correct

question 77

Multiple Choice

Which of the following statements is correct?

• A) In a reverse split,a company reduces the number of shares outstanding in order to stabilize and provide a floor for a rapidly declining stock price.
• B) In theory,dividends are determined as a residual item.Therefore,in order to conserve earnings for better future earnings opportunities,the poorer the firm's investment opportunities,the lower its dividend payments should be.
• C) The farther to the right the IOS is the higher a firm's dividend payout ratio,other things held constant.
• D) Even if a stock split has no information content,and even if the dividend per share adjusted for the split does not increase,there can still be a real benefit (i.e. ,a higher value for shareholders)from such a split,but any such benefit is probably small.

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