Shareholders Are More Apt to Prefer a High Dividend Payout

question 49

Multiple Choice

Shareholders are more apt to prefer a high dividend payout if a firm

• A)has high flotation costs.
• B)has a high rate of growth which requires additional funding.
• C)offers high capital gains that are taxed at a favorable rate.
• D)has lower tax rates than the shareholder.
• E)will spend the funds on a high-premium acquisition if the dividend is not paid.

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Definitions:

Tenth Amendment

An amendment to the U.S. Constitution that emphasizes the federal system of government by stating powers not given to the federal government nor prohibited to the states by the Constitution are reserved for the states or the people.

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Denotes powers that are not explicitly delegated to the national government by the constitution, thus remaining with the state governments.

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An amendment to the U.S. Constitution that guarantees freedoms concerning religion, expression, assembly, and the right to petition.

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Fundamental rights that are universally recognized and protected, often considered inherent to human dignity and not subject to being taken away or abridged by laws.