Suppose Two Equally Risky Shares,Div and Cap,offer the Same Expected

question 68

Essay

Suppose two equally risky shares,Div and Cap,offer the same expected return before tax.Div shares pay a generous dividend but offer low expected capital gains.Cap shares pay low dividends but offer high expected capital gains.Which of the two shares would a pension fund prefer? An individual? A corporation? Explain your answers.

---

Definitions:

Safeguards

Measures implemented to protect against harm, damage, theft, or unauthorized access.

Federal

Relating to the central government of a federation rather than state, local, or provincial authorities.

State Courts

Judiciary bodies within individual U.S. states responsible for interpreting and applying state laws and constitutions.

Fourth Amendment

An amendment to the United States Constitution providing protection against unreasonable searches and seizures and requiring any warrant to be judicially sanctioned and supported by probable cause.