Indicate whether the following statements are true or false. If the statement is false, explainwhy.a. If a firm repurchases its stock in the open market, the shareholders who tender thestock are subject to capital gains taxes.b. If you own 100 shares in a company’s stock and the company’s stock splits two-forone,you will own 200 shares in the company following the split.c. Some dividend reinvestment plans increase the amount of equity capital available tothe firm.d. The Tax Code encourages companies to pay a large percentage of their net income inthe form of dividends.e. If your company has established a clientele of investors who prefer large dividends,the company is unlikely to adopt a residual dividend policy.f. If a firm follows a residual dividend policy, holding all else constant, its dividendpayout will tend to rise whenever the firm’s investment opportunities improve.
Indicate whether the following statements are true or false. If the statement is false, explain
why.
a. If a firm repurchases its stock in the open market, the shareholders who tender the
stock are subject to
b. If you own 100 shares in a company’s stock and the company’s stock splits two-forone,
you will own 200 shares in the company following the split.
c. Some dividend reinvestment plans increase the amount of equity capital available to
the firm.
d. The Tax Code encourages companies to pay a large percentage of their net income in
the form of dividends.
e. If your company has established a clientele of investors who prefer large dividends,
the company is unlikely to adopt a residual dividend policy.
f. If a firm follows a residual dividend policy, holding all else constant, its dividend
payout will tend to rise whenever the firm’s investment opportunities improve.
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