5 point question (they are all connected)

Scorecard Corp. is an oil drilling company and has some free cash flow that is not expected to be used for growth or investment projects. The company plans to distribute to its shareholders but is still decieding whether they should conduct a stock repurchase or distribute dividends. 1. Which of the following is a characteristic of a firm's optimal policy? a. It maximizes the firm's intrinsic value

b. It maximizes the firm's total assets

c. It maximizes the firm's return on equity

D. It maximzes the firm's earnings

Which of these statements is true? a. Taxes on dividends are paid in the year that they are recieved

b. Taxes on dividends are paid when the stock is sold

Connsequently, the tax code encourages many individual investors to prefer _________:

a. Dividends

b. capital gains

Some researchers and analysts have noticed a trend in which firms that increase their dividends see an increase in their stock price. The theory of ______________________explains this penomenon.

a. information content b. clintele effect

In some cases, analysts have noticed that groups of similar investors tend to flock to stocks that have dividends policies consistent with their needs. This circumstances is an illustration of _______:

a. The information content effect

b. The clientele effect