QUESTION 19 Which of the following does NOT normally influence a firm's dividend policy decision? a. The firm's ability to accelerate or delay investment projects without adverse consequences. b. A strong preference by most of its shareholders for current cash income versus potential future capital gains O. Constraints imposed by the firm's bond indenture, Od. The fact that much of the firm's equipment is leased rather than bought and owned. Oe. The fact that Congress is considering changes in the tax law regarding the taxation of dividends versus capital gains. QUESTION 20 Ob Which of the following statements is CORRECT? O a Historically, the tax code has encouraged companies to pay dividends rather than retain earnings If a company uses the residual dividend model to determine its dividend payments, dividend payout will tend to increase whenever its profitable investment opportunities increase relatively rapidly O The more a firm's management believes in the clientele effect, the more likely the firm is to adhere strictly to the residual dividend model O a Large stock repurchases financed by debt tend to increase expected earnings per share, but they also tend to increase the firm's financial risk A dollar paid out to repurchase stock has the same tax benefit as a dollar paid out in dividends. Thus, both companies and investors should be indifferent between distributing cash through dividends and stock repurchase programs e