Why May a Large Increase in Earnings Not Translate into a Large

question 5

Multiple Choice

Why may a large increase in earnings not translate into a large increase in dividends?

• A)the earnings will be taxed.
• B)some investors may prefer capital gains.
• C)managers wish to assess the earning's persistence.
• D)the earnings may already be a part of retained earnings.

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Definitions:

Latch

A mechanical fastener that joins two objects or surfaces, allowing for easy separation or access.

Gear

A mechanical component featuring teeth that mesh with other gear teeth to transmit torque and speed in machinery.

Seized Caliper

Refers to a brake caliper that has become stuck in a position, either applied or released, leading to impaired braking performance.

Caliper Piston

A component of a disc brake system that moves within the caliper to press brake pads against the rotor, slowing the vehicle.