Which of the Following Statements Is Correct

question 15

Multiple Choice

Which of the following statements is correct?

• A) One advantage of dividend reinvestment plans is that they enable investors to postpone paying taxes on the dividends credited to their account.
• B) Stock repurchases can be used by a firm that wants to increase its debt ratio.
• C) Stock repurchases make sense if a company expects to have a lot of profitable new projects to fund over the next few years, provided investors are aware of these investment opportunities.
• D) One advantage of an open market dividend reinvestment plan is that it provides new equity capital and increases the shares outstanding.
• E) One disadvantage of dividend reinvestment plans is that they increase transactions costs for investors who want to increase their ownership in the company.

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Definitions:

Summer

Summer is one of the four temperate seasons, characterized by warmer weather, longer days, and typically occurs between spring and autumn.

Temperate Lakes

Freshwater lakes found in regions with moderate climates, often characterized by distinct seasonal temperature variations.

Epilimnion

The upper layer of water in a stratified lake, characterized by warmer temperatures and high levels of dissolved oxygen.

Hypolimnion

The lower layer of water in a stratified lake, characterized by being cold and typically oxygen-deficient, lying below the thermocline and epilimnion.