Which of the Following Must Be True for the Dividend

question 122

Multiple Choice

Which of the following must be true for the dividend irrelevance theory to apply?

• A)Transaction costs must be small.
• B)Floatation costs must be small.
• C)Ordinary income and capital gains must be taxed at nearly the same rate.
• D)Both a. and c. are correct.
• E)All of the above are correct.

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Definitions:

Pure Monopolist

A sole producer in a market with no close substitutes for the product, allowing for the control of price.

Marginal Revenue

The supplementary earnings obtained from the sale of one more unit of a product or service.

Revenue Curves

Graphs showing the relationship between the sales volume and the revenue generated from those sales.

Elastic Portion

The segment of a demand curve where the quantity demanded changes significantly as a result of price changes, indicating high price elasticity of demand.