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Basic Question 2 of 10
The tax-preference theory of dividends would suggest that investors (assume capital gains tax rate is lower than dividend income tax rate)
B. prefer that firms retain and reinvest earnings.
C. are indifferent between dividend payment and earnings retention.
A. prefer that firms pay dividends.
B. prefer that firms retain and reinvest earnings.
C. are indifferent between dividend payment and earnings retention.
User Contributed Comments 2
| User | Comment |
|---|---|
| katybo | tax-averse theory? |
| thebkr777 | The answer give it to us... |
Your review questions and global ranking system were so helpful.
Lina
Learning Outcome Statements
compare theories of dividend policy and explain implications of each for share value given a description of a corporate dividend action;
CFA® 2024 Level II Curriculum, Volume 3, Module 18.