Which of the Following Statements Is Correct

question 33

Multiple Choice

Which of the following statements is correct?

• A) One nice feature of dividend reinvestment plans (DRIPs) is that they reduce the taxes investors would have to pay if they received cash dividends.
• B) Empirical research indicates that, in general, companies send a negative signal to the marketplace when they announce an increase in the dividend, and as a result, share prices fall when dividend increases are announced. The reason for this is that investors interpret the increase as a signal that the firm has relatively few good investment opportunities.
• C) If a company wants to raise new equity capital steadily over time, a new stock dividend reinvestment plan would make sense. However, if the firm does not want or need new equity, then an open market purchase dividend reinvestment plan would probably make more sense.
• D) Dividend reinvestment plans have not caught on in most industries, and today about 99% of all companies with DRIPs are utilities.

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Definitions:

Melanin

A pigment found in skin, hair, and eyes that determines color and provides protection against ultraviolet light.

Skin Color

The pigmentation of a person's skin, primarily determined by genetic inheritance and exposure to sunlight, which can vary significantly among individuals and populations.

Thrifty Genotype

A hypothesis suggesting that certain genotypes, which efficiently store fat during periods of abundance, were advantageous for survival during times of scarcity but may predispose individuals to diabetes and obesity in modern times.

Human Variation

The genetic, physical, and behavioral differences among individuals and populations.