Those Economists Feeling That Low Dividend Payouts Will Increase Share

question 32

Multiple Choice

Those economists feeling that low dividend payouts will increase share price focus on:

• A) the difficulty in predicting earnings.
• B) superior reinvestment opportunities.
• C) tax differentials between dividends and capital gains.
• D) the cost of borrowing to maintain high payouts.

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Definitions:

Factor Portfolio

A portfolio constructed to have a high sensitivity to certain risk factors, aiming to achieve specific investment outcomes related to those factors.

Well-diversified Portfolio

An investment portfolio spread across different assets to reduce exposure to risk associated with any single investment.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, commonly used in finance to assess the volatility of an investment.