12. Which of the following statements is correct? a Investo rs may interpret a stock repurchase program as a signal that the firm's managers believe the stock is undervalued. ngress eliminates taxes on capital gains but leaves the personal tax rate on dividends unchanged, this would motivate companies to make shareholder distributions via dividends rather than repurchases One advantage of adopting the residual dividend policy is that this policy makes it easier for corporations to develop a specific and well-identified dividend clientele. New-stock dividend reinvestment plans (DRIPS) are similar to stock dividends because they both increase the number of shares outstanding but do not change the firm's total amount of book equity. c. 13. Which of the following is correct? a. One advantage of a residual dividend policy is that it leads to a stable dividend payout, which investors b. An increase in the stock price when a company decreases its dividend is consistent with the signaling theory c. The dividend preference theory asserts that investors prefer dividends to capital gains because dividends d. Firms with a lot of good investment opportunities and a relatively small amount of cash tend to have above prefer. as postulated by Modigliani and Miller. are more certain than capital gains. This is sometimes called the "bird-in-the-hand" effect. average payout ratios