A Reason Why Management May Have a Long-Term Dividend Payout

question 45

Multiple Choice

A reason why management may have a long-term dividend payout ratio is that:

• A)investors have a long-term investment horizon.
• B)the present value of taxes paid on future dividend income is less than the present value of taxes paid on current dividend income.
• C)management views dividends as a function of sustainable profits.
• D)it assists management in long-term planning.

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