5. Which of the following statements is CORRECT?
a. One advantage of the residual dividend policy is that it leads to a stable dividend payout, which investors like.
b. Stock repurchases make the most sense at times when a company believes that its stock is undervalued.
c. If the “clientele effect” is correct, then for a company whose earnings fluctuate, a policy of paying a constant percentage of net income will probably maximize the stock price.
d. An increase in the stock price when a company decreases its dividend is consistent with signaling theory.
e. Firms with a large number of investment opportunities and a relatively small amount of cash tend to have above average dividend payout ratios.