All Else the Same, an Investor Is Likely to Prefer

question 230

Multiple Choice

All else the same, an investor is likely to prefer firms with low dividend payouts:

• A) If the firm doesn't have any positive NPV projects in which it could invest.
• B) If marginal corporate tax rates exceed marginal personal tax rates.
• C) If flotation costs are significant.
• D) If the investor has a need for current income.
• E) If the investor is tax-exempt.

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Definitions:

Tutor

A person who provides individual guidance or instruction, typically in a specific subject area.

Practical Wisdom

The ability to make the right judgment about what to do in a given situation; often associated with virtues and ethical living.

Aristotle

Ancient Greek philosopher and scientist, a student of Plato and teacher of Alexander the Great, known for his writings on physics, metaphysics, poetry, theater, music, logic, rhetoric, linguistics, politics, government, ethics, biology, and zoology.

Quandary Ethics

A framework for addressing ethical decisions that present a significant conflict of principles or values, leading to uncertainty on the right course of action.