Final answer:
The correct option is that a non-dividend-paying firm is more likely to do a stock repurchase than to commence paying dividends, as it aligns with trends in business practices and tax treatments.
The correct option among the multiple choices provided is that "a non-dividend-paying firm is more apt to do a stock repurchase than to commence paying dividends.
Step-by-step explanation:
" This statement aligns with current business practices where companies may choose to return value to shareholders through stock repurchases, which can be seen as a flexible alternative to dividend payments. It is also noteworthy that, historically and for tax purposes, cash dividends and stock repurchases have been treated differently.
From the information provided, it is evident that in recent decades – especially since the 1990s – dividends have offered a lower annual return in comparison to earlier decades when it was around 4%. Moreover, the statement that cash dividends outweighed stock repurchases for the period 2003-2020 requires specific data to confirm, which is not provided. Similarly, whether many firms decreased their dividends after the 2003 change in dividend taxation is not mentioned in the provided context and would require specific historical data. Lastly, firms tend to prefer stock repurchases over cash dividends mainly due to the flexibility they offer and potential tax benefits under certain tax conditions, contradicting the statement that firms prefer cash dividends for their flexibility and tax benefits.
The correct option is last one.