Investors May Prefer Lower Dividends Over Higher Dividends Because

question 34

Multiple Choice

Investors may prefer lower dividends over higher dividends because:

• A) the low dividends are more predictable.
• B) capital gains may be taxed less heavily than dividends.
• C) of the "bird in the hand" logic.
• D) low dividends indicate heavy investment for the future.

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Definitions:

Prepaid Expenses

Costs paid for in advance of receiving the benefit of the service or product, recorded as an asset on the balance sheet until the expense is incurred.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues.

Operating Activities

Activities directly related to the daily business operations, including cash generated from the core business as well as cash used.

Sale Of Equipment

A transaction where a business disposes of equipment assets, which may result in a gain or loss reflected in the financial statements.