Question 4 (1 point) Which of the following statements is TRUE?

Question 4 options:

1) Firms with a lot of good investment opportunities and a relatively small amount of cash tend to have above-average payout ratios.

2) One advantage of the residual dividend policy is that it leads to a stable dividend payout, which investors like.

3) Stock repurchases make the most sense at times when a company believes its stock is undervalued.

4) An increase in the stock price when a company decreases its dividend is consistent with signalling theory as proposed by MM.