Which One of the Following Is an Argument in Favor

question 4

Multiple Choice

Which one of the following is an argument in favor of a low dividend policy?

• A)Few,if any,positive net present value projects are available to the firm.
• B)Only the gain on a sale of stock is taxed.
• C)Agency costs
• D)Investor desire for current income
• E)Lack of investor self-control

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Definitions:

Arbitrage

Arbitrage is the simultaneous purchase and sale of the same asset in different markets to profit from unequal prices.

Overconfidence

The belief that your abilities are better than they really are.

Underestimating

Underestimating refers to the act of evaluating something as less powerful, important, or serious than it actually is, which can lead to miscalculations in finance and planning.

Anchoring And Adjustment

A cognitive heuristic where individuals rely too heavily on an initial piece of information (anchor) when making decisions, adjusting insufficiently from that anchor.