Which of the following statements is most correct?
A) One reason that companies tend to avoid stock repurchases is that dividend payments are taxed more favorably than stock repurchases.
B) One advantage of dividend reinvestment plans is that they allow shareholders to avoid paying taxes on the dividends that they choose to reinvest.
C) If a company announces a 2-for-1 stock split and the overall value of the firm remains unchanged, the company's stock price must have doubled.
D) All of the statements above are correct.
E) None of the statements above is correct.

Question

Quizplus · Accepted Answer

None of the statements are correct. A) is incorrect because stock repurchases are often taxed more favorably than dividends. B) is incorrect because dividends are taxable even if reinvested. C) is incorrect because a 2-for-1 stock split halves the stock price, not doubles it.

Which of the Following Statements Is Most Correct