Some Investors Prefer Dividends to Retained Earnings (And the Capital

question 47

True/False

Some investors prefer dividends to retained earnings (and the capital gains retained earnings bring),while others prefer retained earnings to dividends.Other things held constant,it makes sense for a company to establish its dividend policy and stick to it,and then it will attract a clientele of investors who like that policy.

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Definitions:

Long-run Phillips Curve

An economic concept that represents the relationship between inflation and unemployment when the effects of short-term shocks have dissipated, showing no trade-off between inflation and unemployment in the long run.

Natural Rate

A concept in economics referring to the level of unemployment at which there is no cyclical or deficient-demand unemployment. It represents a balance between the supply of labor and job vacancies, considering that some frictional and structural unemployment is inevitable.

Unemployment

The situation in which individuals who are capable of working and are seeking employment are unable to find work.

Expected Inflation

The rate at which prices of goods and services are anticipated to rise over time, as forecasted by consumers, businesses, and economists.