Which One of These Is a Con of Paying Dividends

question 39

Multiple Choice

Which one of these is a con of paying dividends?

• A)Paying dividends reduces agency costs when excess cash is available to a firm.
• B)Dividends can be used to signal a firm's optimistic outlook.
• C)Dividends are frequently taxed as ordinary income.
• D)Dividends appeal to income-seeking investors.
• E)Managers can pay dividends to keep cash from bondholders.

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