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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... |
I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu
Learning Outcome Statements
describe types of information (signals) that dividend initiations, increases, decreases, and omissions may convey;
explain how agency costs may affect a company's payout policy;
CFA® 2025 Level II Curriculum, Volume 3, Module 16.