Which of the Following Statements About the Relative Advantages of Stock

question 63

Multiple Choice

Which of the following statements about the relative advantages of stock repurchases over dividends is NOT true?

• A) Since most ongoing stock repurchase programs are as visible as dividend programs, they can be used effectively to send a positive signal about a firm's prospects to investors.
• B) Open-market stock purchases allow management more flexibility because investors are less likely to react if the management cuts back or ends a stock repurchase as compared to cutting back on dividend payments.
• C) Stock repurchases allow stockholders to choose whether or not to participate in the stock repurchase. This allows stockholders to have more control over their tax burden.
• D) Historically, taxes on dividend payment have been higher than those on stock repurchases.

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Definitions:

Staged Manipulation

The deliberate modification or control of variables in an experiment to investigate their effects on other variables.

Extraneous Variables

Outside factors that could influence the outcome of an experiment, potentially confounding the results.

Physiological State

The condition or state of the body or bodily functions at a particular time, including aspects like heart rate, hormone levels, or neural activity.

Generality

The extent to which findings, principles, or theories are applicable across a wide range of situations, conditions, or groups.