A dividend reinvestment plan (DRIP):
A. offers fixed dividends to the firm's stockholders.
B. requires payment of a constant percentage of the firm's earnings as annual cash dividends.
C. enables stockholders to automatically reinvest cash dividends they receive in the stocks of the dividend-paying firm.
D. pays stockholders tax-free cash dividends.
E. pays extra cash dividends in years the firm has few acceptable investment opportunities.
Answer: C
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