1. The primary purpose of laws prohibiting a firm from paying dividends that include its legal capital is to:
A) Reduce investors' tax liability
B) Ensure that the balance sheet balances
C) Prevent managers from paying out all the firm's assets
D) Prevent managers from paying large dividends
2. Both a stock split and a stock dividend will result in an increase in:
A) The number of shares outstanding
B) The market value of the firm
C) The total assets of the firm
D) Both the number of shares outstanding and the total assets of the firm