Scenario 6-1 the Quotation Below Relates to the Following Question(s)

question 150

Multiple Choice

Scenario 6-1 The quotation below relates to the following question(s) .
"The ideal policy, from the viewpoint of the state, is one with identifiable beneficiaries, each of whom is helped appreciably, at the cost of many unidentifiable persons, none of whom is hurt very much." (George Stigler, A Dialogue on the Proper Economic Role of the State )
Refer to Scenario 6-1. This statement is probably

• A) incorrect because voters are well informed on a wide range of political issues.
• B) incorrect because the political process dilutes the influence of special interest groups, because like other citizens, their members have only one vote.
• C) correct because the well-informed voter will favor policies that cater to the views of small groups of people.
• D) correct because voters who have a strong personal interest in an issue will tend to support candidates who cater to their views, whereas most other voters ignore the issue.

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Definitions:

Dividend Clienteles

Groups of investors who prefer stocks of companies with a specific dividend policy that matches their income needs and tax situations.

Cyclical Dividend Policy

A dividend policy where the dividend payout is linked to the company's earnings or economic cycles.

Special Dividend Payments

One-time payments made by a company to shareholders, often signaling strong financial health or the distribution of extraordinary profits.

Target Debt/Equity Ratio

A firm's optimal mix of debt and equity financing aimed at minimizing its cost of capital and maximizing valuation.