Which of the following statements is NOT correct?
A) stockholders pay no income tax on dividends if the dividends are used to purchase stock through a dividend reinvestment plan
B) Companies can repurchase shares to distribute large inflows of cash, say from the sale of a division, to stockholders without paying cash dividends
C) investors can interpret a stock repurchase program as a signal that the firm’s managers believe the stock is undervalued
D) After a 3-for-1 stock split, a company’s price per share should fall, but the number of shares outstanding will rise
Choose an option and explain.