Question $5$

Which of the following statements is FALSE?

Most companies that pay dividends pay them monthly

Occasionally, a firm may pay a one$-$time, special dividend that is usually much larger than a regular dividend.

From an accounting perspective, dividends generally reduce the firm's current $($or accumulated$)$ retained

earnings.

The way a firm chooses between paying dividends and retaining earnings is referred to as its payout policy.

Question $6$

Which of the following statements is FALSE?

Managers are much less committed to dividend payments than to share repurchases.

While an increase of a firm's dividend may signal management's optimism regarding its future cash flows, it

might also signal a lack of investment opportunities.

Share repurchases are a credible signal that the shares are under$-$priced, because if they are over$-$priced a share

repurchase is costly for current shareholders.

Managers will clearly be more likely to repurchase shares if they believe the stock to be under$-$valued.