CFA Practice Question

There are 151 practice questions for this study session.

CFA Practice Question

The "bird-in-the-hand" theory of dividends would suggest that investors

A. prefer that firms pay dividends.
B. prefer that firms retain and reinvest earnings.
C. are indifferent between dividend payment and earnings retention.
Correct Answer: A

According to the "bird-in-the-hand" theory of dividends, investors would prefer that earnings be paid out as dividends today.

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