An Investor Will Prefer a Low Dividend If

question 32

Multiple Choice

An investor will prefer a low dividend if:
I.the firm cannot reinvest the funds in projects where the yields exceed those that a shareholder could get elsewhere.
II.the investor needs a high level of current income.
III.the investor faces high personal taxes.

• A)I only
• B)III only
• C)I and II
• D)II and III

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Definitions:

Marginal Revenue Product

The extra income that comes from using an additional unit of a resource, like workers or money.

Derived Demand

Demand for a good or service that arises from the demand for another good or service; for example, the demand for steel is derived from the demand for cars.

Resource Demand

Refers to the total amount of goods and services that businesses require to produce their own goods and services.

MRP

An acronym for Material Requirements Planning, a system used for production planning and inventory control, or alternatively for Marginal Revenue Product, the extra revenue generated from employing one more unit of a resource.