One Possible Reason That Shareholders Often Insist on Higher Dividends

question 47

Multiple Choice

One possible reason that shareholders often insist on higher dividends is

• A)they agree with Miller and Modigliani.
• B)the capital gains tax disadvantage.
• C)the stock market is efficient.
• D)they do not trust managers to spend retained earnings wisely.

Recognize the impact of price changes on consumer and producer surplus.

Understand the conditions for market equilibrium and how it affects surplus.

Identify the factors leading to changes in the quantity demanded and supplied in the market.

Analyze the role of economic signals in correcting market imbalances.

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Definitions:

Dentist Appointment

A scheduled visit to a dental care professional for the examination, diagnosis, prevention, or treatment of oral health issues.

Cognitive Misers

A term referring to the tendency of humans to avoid expending effort and resources when thinking and to prefer simple and less effortful ways of processing information.

Automatic Modes

Processes in the brain that occur without conscious thought, often as habitual responses or reactions to certain stimuli.

Conserve Effort

The tendency to reduce the amount of mental or physical energy expended on tasks, often by relying on heuristics or shortcuts.