Dividend Policy May Affect Firm Value Because

question 30

Multiple Choice

Dividend policy may affect firm value because

• A)there is an unsatisfied clientele that prefers dividends to capital gains.
• B)there is an unsatisfied clientele that prefers dividends to capital gains, and there are sufficient loopholes in the tax system that wealthy shareholders can avoid taxes on dividends.
• C)there is an unsatisfied clientele that prefers dividends to capital gains, and well-managed companies prefer to signal their worth by paying high dividends.
• D)there are sufficient loopholes in the tax system that wealthy shareholders can avoid taxes on dividends, and well-managed companies prefer to signal their worth by paying high dividends.

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Definitions:

Distributive Justice

The ethical concept concerning the fair distribution of resources among members of a society.

Earned

Acquired or deserved as a result of effort or action.

Deserve

refers to having earned or being worthy of a specific outcome or treatment due to one's actions or qualities.

Autonomy

The capacity to make an informed, uncoerced decision independently, often used in contexts of personal and political freedom.