Which of the Following Statements Is False

Which of the following statements is false?

A) The total payout model allows us to ignore the firm's choice between dividends and share repurchases.
B) By repurchasing shares, the firm increases its share count, which decreases its earnings and dividends on a per-share basis.
C) The total payout model discounts the total payouts that the firm makes to shareholders, which is the total amount spent on both dividends and share repurchases.
D) In the dividend discount model we implicitly assume that any cash paid out to the shareholders takes the form of a dividend.

Correct Answer:

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