Which One of the Following Is an Argument in Favor

question 160

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.

---

Definitions:

Slow Payments

Payments made by a debtor that are consistently made later than agreed upon terms, leading to delayed receipt of funds by the creditor.

Days' Cash

The average number of days a company takes to collect cash from its sales.

Fiscal Year

A 12-month period that a company or government uses for accounting purposes and preparing financial statements, which may not align with the calendar year.

Liquidity Position

A financial metric used to determine how easily a company can pay off its short-term liabilities with its liquid assets.