Which of the following statements is correct? a. The clientele effect can explain why so many firms
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Question:
Which of the following statements is correct?
a. | The clientele effect can explain why so many firms change their dividend policies so often. | |
b. | Investors who receive stock dividends must pay taxes on the value of the new shares in the year the stock dividends are received. | |
c. | 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. | |
d. | 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. | |
e. | 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. |
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