Which one of the following statements is true?
A) Board members are appointed by a company's CEO.
B) Stockholders do not pay taxes on stock dividends.
C) Intelligent investors should be concerned about future after-tax corporate profits when investing.
D) If a cash dividend is declared by the board of directors, each stockholder will receive a different dollar amount depending on the length of time they have owned their shares.
E) Corporate dividends are always paid in cash.

Question

Quizplus · Accepted Answer

Intelligent investors should be concerned about future after-tax corporate profits when investing because it is a reflection of the company's ability to generate sustainable earnings and therefore, grow its stock price over time. The other statements are false: A) Board members are elected by shareholders, not appointed by the CEO; B) Stockholders do pay taxes on stock dividends; D) If a cash dividend is declared by the board of directors, each stockholder receives the same amount per share, regardless of how long they have owned their shares; E) Corporate dividends can be paid in other forms, such as stock or property, and not only in cash.

Which One of the Following Statements Is True