Why May a Large Increase in Earnings Not Translate into a Large

question 8

Multiple Choice

Why may a large increase in earnings not translate into a large increase in dividends?

• A) The earnings will be taxed.
• B) Some investors may prefer capital gains.
• C) Managers wish to assess the earning's persistence.
• D) The earnings may already be a part of retained earnings.

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Definitions:

Gymnosperms

A collection of plants capable of producing seeds, featuring members such as conifers, cycads, Ginkgo, and gnetophytes, distinguished by their seeds that are not contained within an ovary.

Softwood

Wood derived from coniferous trees, typically softer and used in various types of construction and paper products.

Cone-Bearing

Pertaining to plants that produce reproductive structures known as cones, such as pines and other conifers.

Lateral Transport

The movement of substances parallel to the surface of a cell membrane, often involved in various cellular processes.