Which of the Following Statements Is FALSE

question 65

Multiple Choice

Which of the following statements is FALSE?

• A)In perfect capital markets,holding fixed the investment policy of a firm,the firm's choice of dividend policy is irrelevant and does not affect the initial share price.
• B)In a perfect capital market,when a dividend is paid,the share price drops by the amount of the dividend when the stock begins to trade ex-dividend.
• C)In perfect capital markets,an open market share repurchase has no effect on the stock price,and the stock price is the same as the ex-dividend price if a dividend were paid instead.
• D)In perfect capital markets,investors are indifferent between the firm distributing funds via dividends or share repurchases.By reinvesting dividends or selling shares,they can replicate either payout method on their own.

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Definitions:

Short Reports

Concise documents that present information on a specific topic, typically structured to facilitate quick reading and understanding.

Internal Proposal

A document or plan proposed within an organization, aiming to address and provide solutions to internal issues or projects.

External Proposal

An external proposal is a formal suggestion or plan submitted to an organization or individual outside one's own company, often seeking approval, funding, or partnership.

Enhance Credibility

The process of increasing the believability and trustworthiness of a person or organization.