Which of the Following Statements Is Correct

question 37

Multiple Choice

Which of the following statements is correct?

• A)Current Canadian tax law encourages companies to pay dividends rather than retain earnings.
• B)If a company uses the residual dividend model to determine its dividend payments, dividend payouts will tend to increase whenever the company's profitable investment opportunities increase.
• C)The stronger management thinks the clientele effect is, the more likely the firm is to adopt a strict version of the residual dividend model.
• D)Large stock repurchases financed by debt tend to increase earnings per share, but they also increase the firm's financial risk.

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Definitions:

Two-tailed Test

A statistical hypothesis test in which the area of rejection is on both sides of the sampling distribution, allowing for the exploration of the possibility that a parameter is significantly greater than or less than a specified value.

Means

The average of a set of numerical values, calculated as the sum of the values divided by the number of values.

Confidence Interval

A span of numbers, obtained from statistical analysis of a sample, which is expected to encompass the value of a parameter from the overall population that is not yet known.

Mean Height

The average vertical distance measurement, usually of people, within a specific group or population.