Which One of the Following Is an Argument in Favor

question 32

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 shareholders have minimal taxable income.
• D)A majority of shareholders 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:

Arithmetic Sequence

A sequence of numbers in which the difference between consecutive numbers is constant.

Nth Partial Sum

The sum of the first n terms of a sequence, used to determine the cumulative value of a series up to a specified number of terms.

Geometric Sequence

An ordered list of numbers where, starting with the second term, each entry is the result of multiplying the one before it by a consistent, non-zero factor termed the common ratio.

Common Ratio

The constant factor between consecutive terms of a geometric sequence.