1. Which of the following is incorrect?

A. A indicator that investors may prefer dividends is that the forward PE ratio on average is lower

B. Good corporate governance practice encourages companies to pay out dividends

C. More investment opportunities constrain companies' ability to pay out dividends

D. In economic downturn, investors would prefer dividends

2. Which of the following is incorrect?

A. Share buybacks indicate that companies have good investment opportunities, thus leading to an increase in the share price

B. Companies can buy back a maximum of 10% of the number of shares issued over a 12-month period without shareholders' approvals

C. In U.S. an unexpected increase in dividend sends a positive signal to the market

D. In Australia, share buybacks are often used to optimize companies' capital structure