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Basic Question 0 of 5
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 am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
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.