Which of the following statements is most correct?
A) The bird-in-the-hand theory would predict that companies could decrease their cost of equity financing by raising their dividend payout.
B) The clientele effect can explain why firms often change their dividend policies.
C) One advantage of adopting a residual distribution policy (with all distributions in the form of dividends) is that it makes it easier for corporations to maintain dividend clienteles.
D) Answers a and c are correct.
E) None of the answers above is correct.

Question

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The Answer of Which of the following statements is most correct?
A) The bird-in-the-hand theory would predict that companies could decrease their cost of equity financing by raising their dividend payout.
B) The clientele effect can explain why firms often change their dividend policies.
C) One advantage of adopting a residual distribution policy (with all distributions in the form of dividends) is that it makes it easier for corporations to maintain dividend clienteles.
D) Answers a and c are correct.
E) None of the answers above is correct.

Which of the Following Statements Is Most Correct