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Which one of the following statements is NOT CORRECT? Investors may interpret a stock repurchase program as a signal that the firm's managers believe the
Which one of the following statements is NOT CORRECT? Investors may interpret a stock repurchase program as a signal that the firm's managers believe the stock is undervalued or alternatively, as a signal that the firm does not have many gooc investment opportunities. o If a firm follows the residual dividend model then a sudden a increase in the number of profitable projects would be likely to lead to a reduction of the firm's dividend payout ratio. Gordon and Lintner's "bird-in-the-hand" fallacy suggests that investors prefer dividends to capital gains because dividends are more certain than capital gains. One of the advantages to dividend reinvestment plans or DRIPs is that stockholders pay no income tax on dividends if the dividends are automatically reinvested into the stocks of the paying companies
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