Label each of the following as True or False. Explain your answer.

a) Following a reverse stock split, the number of shares increases.

b) Following a reverse stock split, total net income decreases.

c) Following a stock split, the P/E ratio decreases.

d) A stock repurchase signals the shares are overvalued.

e) Following a stock split, the EPS increases.

f) Under perfect market conditions (i.e. no taxes or flotation costs), investors prefer receiving dividends rather than capital gains.

g) Increasing dividends signal future growth.

h) The clientele effect theory of dividends suggests that investors prefer higher dividends.

i) In practice, most companies follow a residual dividend policy.

j) Following a cash dividend, the P/E ratio decreases.