Which of the Following Statements Is Most Correct

Multiple Choice

Which of the following statements is most correct?

A) The tax code encourages companies to pay large dividends to their shareholders.
B) If your company has established a clientele of investors who prefer large dividends, the company is unlikely to adopt a residual dividend policy.
C) If a firm follows a residual distribution policy (with all distributions in the form of dividends) , holding all else constant, its dividend payout will tend to rise whenever the firm's investment opportunities improve.
D) All of the statements above are correct.
E) Answers b and c are correct.