Shareholders May Prefer Dividends to Reinvestment by the Firm

question 16

Multiple Choice

Shareholders may prefer dividends to reinvestment by the firm:

• A) because dividends provide the highest return to investors.
• B) because dividend payments are tax free.
• C) because investors may prefer current cash to future cash.
• D) because shareholders may prefer faster growth in the firm.

---

Definitions:

Histamine

A compound involved in local immune responses, regulating physiological function in the gut and acting as a neurotransmitter.

Heparin

Anticoagulant that prevents platelet agglutination and thus prevents thrombus formation.

Platelet Plug

Accumulation of platelets that stick to each other and to connective tissue; prevents blood loss from damaged blood vessels.

Collagen Fibers

Strong, insoluble protein fibers that provide structural support, strength, and elasticity to connective tissue.