Which of the Following Statements Is Correct

question 57

Multiple Choice

Which of the following statements is correct?

• A) An open-market dividend reinvestment plan will be most attractive to companies that need new equity and would otherwise have to issue additional shares of common stock through investment bankers.
• B) Stock repurchases tend to reduce financial leverage.
• C) If a company declares a 2-for-1 stock split, its stock price should roughly double.
• D) One advantage of adopting the residual dividend policy is that this makes it easier for corporations to meet the requirements of Modigliani and Miller's dividend clientele theory.
• E) If a firm repurchases some of its stock in the open market, then shareholders who sell their stock for more than they paid for it will be subject to capital gains taxes.

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Definitions:

Psychoanalytic Tradition

A framework in psychology, originated by Sigmund Freud, which emphasizes the role of unconscious factors in personality and behavior.

Repress Memories

The psychological defense mechanism where an individual unconsciously blocks out memories that are too traumatic or stressful to confront.

Schemas

Cognitive structures or frameworks that help organize and interpret information, allowing individuals to understand and predict the world around them.