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Question(s) / Instruction(s):

Which of the following statements is CORRECT?

A) One advantage of an open market dividend reinvestment plan is that it provides new equity capital and increases the shares outstanding.
B) Stock repurchases can be used by a firm that wants to increase its debt ratio.
C) One disadvantage of dividend reinvestment plans is that they increase transactions costs for investors who want to increase their investment in the company.
D) Stock repurchases make sense if a company expects to have a lot of profitable new projects to fund over the next few years, provided investors are aware of these investment opportunities.
E) One advantage of dividend reinvestment plans is that they enable investors to postpone paying taxes on the dividends credited to their account.

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