Capital Gains May Be Preferred by Investors Over Dividends Even

question 31

Multiple Choice

Capital gains may be preferred by investors over dividends even if dividends and capital gains are taxed at the same rate because:

• A) taxes on dividends are withheld immediately.
• B) taxes on capital gains are paid annually.
• C) taxes on capital gains can be timed.
• D)after-tax dividends are less certain than capital gains.

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Definitions:

Slope Downward

A graphical representation indicating a decrease or decline in a variable as another variable increases, common in supply and demand curves.

Coase Theorem

A principle in economics that suggests that if property rights are well-defined and trade is possible without cost, parties can negotiate to resolve externalities or conflicts over resource allocation efficiently themselves.

Optimal Allocation

The most efficient distribution of resources and efforts among various possible tasks or uses to maximize desired outcomes or objectives.

Social Good

refers to an action or a policy that benefits society at large, often with an emphasis on public resources and welfare.