Which of the Following Statements About the Relative Advantages of Stock

question 77

Multiple Choice

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

• A) Stock repurchases send a stronger signal than dividends to the market about management's belief that the firm's prospects are good.
• 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:

Activity Duration

The total length of time required to complete a specific task or activity from start to finish.

Critical Path

The sequence of stages determining the minimum time needed to complete a project, considering all dependencies and task durations.

Project Variance

The difference between planned and actual project performance, often measured in terms of cost or time.

PERT Analysis

Stands for Program Evaluation and Review Technique, a method used in project management to analyze the tasks involved in completing a project, especially the time needed to complete each task.