The Tax Clientele Effect Implies That Share Price Is Indifferent

question 31

Multiple Choice

The tax clientele effect implies that share price is indifferent to dividend policy because:

• A)share price depends on the value of assets in place.
• B)investors have no say in dividend policy.
• C)in equilibrium,the range of dividend policies available satisfies the needs of investors so that one clientele is as good as another.
• D)investors in high marginal tax brackets would pay a premium for shares of companies that pay no dividends.

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