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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... |
You have a wonderful website and definitely should take some credit for your members' outstanding grades.
Colin Sampaleanu
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® 2025 Level II Curriculum, Volume 3, Module 16.