I have 1 hour 57 minutes for this test. Thanks.
OK, I'm working on them and will answer as soon as possible.
Could you check Question #1. Is there a missing choice? This has only 4 choices and all the other questions have 5 choices. I suspect the missing choice is the answer.
there are 5 choices however maybe when I highlight copy and paste it the option does not show up. I will hand type the options for question 1 for you
Which of the following statements is correct?
1) One advantage of dividend reinvestment plans is that they enable investors to avoid paying taxes on the dividends they receive.
2) If a company has an established clientele of investors who prefer a high dividend payout, and if management wants to keep stockholders happy, it should not follow the strict residual dividend policy.
3) If a firm follows a strict residual dividend policy, then, holding all else constant, its dividend payout ratio will tend to rise whenever the firm’s investment opportunities improve.
4) If Congress eliminates taxes on capital gains but leaves the personal tax rate on dividends unchanged, this would motivate companies to increase their dividend payout ratios.
5) Despite its drawbacks, following the residual dividend policy will tend to stabilize actual cash dividends, and this will make it easier for firms to attract a clientele that prefers high dividends, such as retirees.