Which One of the Following Is an Argument in Favor

question 71

Multiple Choice

Which one of the following is an argument in favor of a low dividend policy?

• A) The tax on capital gains is deferred until the gain is realized.
• B) Few, if any, positive net present value projects are available to the firm.
• C) A preponderance of stockholders have minimal taxable income.
• D) A majority of stockholders have other investment opportunities that offer higher rewards with similar risk characteristics.
• E) Corporate tax rates exceed personal tax rates.

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Definitions:

Total Costs

The sum of all expenses associated with the production and delivery of goods or services, encompassing both fixed and variable costs.

Average Total Cost

This refers to the total cost of production divided by the number of units produced, inclusive of fixed and variable costs.

Marginal Cost

The cost incurred by producing one additional unit of a good or service.

Opportunity Cost

Opportunity cost represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.