1. A company issues new shares and its stock price falls. This is an evidence in support of:

i. The pecking order theory

ii. The agency cost of equity theory

A. i only

B. ii only

C. Both of the above

2. Which of the following statements is true?

i.Mangers with stock options prefer stock repurchase to dividends.

ii. Investors in high income tax brackets prefer low dividend yield stocks to high dividend yield stocks.

A. i only

B. ii only

C. Both of the above

D. Neither of the above

3. Which of the following statements are true?

i. According to the Irrelevance of Dividend Policy, managers cant increase the value of the firm by changing the dividend policy.

ii. Issuing dividends mitigates the problem of wasteful expenditure by managers.

A. i only

B. ii only

C. Both of the above

D. Neither of the above