Multiple Choice
Which of the following statements is correct?
A) A key advantage of the residual dividend policy is that it usually results in a stable dividend policy which is attractive to investors.
B) Investors should prefer that a corporation repurchase its common stock when the stock is overpriced.
C) A reduction in the capital gains rate should work to discourage corporations from repurchasing their shares.
D) The theory that investors prefer dividends rather than capital gains suggests that firms that increase their dividend payout should expect to realize a higher share price and a lower cost of equity capital.
E) Answers c and d are both correct.
Correct Answer:
Verified
Correct Answer:
Verified
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