Which of the following statements is correct?

a. Investors who receive stock dividends must pay taxes on the value of the new shares in the year the stock dividends are received.

b. The clientele effect can explain why so many firms change their dividend policies so often.

c. If a firm follows the residual dividend policy, then a sudden increase in the number of profitable projects is likely to reduce the firm's dividend payout.

d. New-stock dividend reinvestment plans are similar to stock dividends because they both increase the number of shares outstanding but don't change the firm's total amount of book equity.

e. One advantage of adopting the residual dividend policy is that this policy makes it easier for corporations to develop a specific and well-identified dividend clientele

Which of the following is generally NOT true and an advantage of going public?

a. Increases the liquidity of the firm's stock.

b. Makes it easier to obtain new equity capital.

c. Makes it easier for owner-managers to engage in profitable self-dealings.

d. Facilitates stockholder diversification.

e. Establishes a market value for the firm.