Which of the Following Statements Is Correct

question 45

Multiple Choice

Which of the following statements is correct?

• A)If a firm repurchases some of its stock in the open market, then shareholders who sell their stock for more than they paid for it will be subject to capital gains taxes.
• B)An open-market dividend reinvestment plan will be most attractive to companies that need new equity and would otherwise have to issue additional shares of common stock through investment bankers.
• C)Stock repurchases tend to reduce financial leverage.
• D)If a company declares a 2-for-1 stock split, its stock price should roughly double.

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Definitions:

Mutually Exclusive Events

Two events that cannot occur at the same time within the same experiment or observation.

Independent Events

Two or more events that have no influence on each other's occurrence, meaning the occurrence of one event does not affect the probability of the other.

Intersection

In mathematics, it refers to the set of elements common to two or more sets.

Posterior Probabilities

Probabilities that are updated or revised after taking into account new evidence or information.