Because Each Individual Employee Makes His or Her Own Investment

question 22

True/False

Because each individual employee makes his or her own investment decisions,a salary-reduction plan could be described as a self-directed retirement plan.

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Definitions:

Clientele Argument

A theory suggesting that companies attract investors whose preferences align with the company's policies regarding dividends, financing, and investment.

Dividend Theory

A set of principles and theories that explain the rationale and effects of dividend policies on an organization's value and shareholders' wealth.

Capital Gains

Capital gains represent the positive difference between the sale price of an asset and its original purchase price.

Target Payout Ratio

The target payout ratio is a company’s long-term goal for the percentage of its earnings that will be paid out to shareholders as dividends.