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.

---

Definitions:

Input Device

A hardware component used to enter data into a computer system, such as a keyboard, mouse, or scanner.

Desktop PC

A personal computer designed for regular use at a single location on or near a desk due to its size and power requirements.

Mouse

A hand-held pointing device used to control a cursor in a graphical user interface on a computer screen, facilitating smooth navigation, selection, and interaction with digital elements.