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:

Attachment Patterns

Refers to the systematic behaviors and responses developed in early childhood that influence how individuals form emotional bonds and relationships throughout life.

Bowlby

John Bowlby, a British psychologist known for his work in developing attachment theory, focusing on the importance of early emotional bonds.

Attachment Processes

The formation, development, and dynamics of emotional bonds between individuals, typically in the context of caregiver and child relationships.

Adaptive Value

The extent to which a trait or behavior increases the chances of survival and reproduction of an organism in its environment.