If We Start with the Frictionless Markets Concerning the Irrelevance

question 44

Multiple Choice

If we start with the frictionless markets concerning the irrelevance of dividend policy and then we introduce personal taxes that are higher for dividends than capital gains then we would expect

• A) for dividends to be less popular.
• B) for dividends to become even more popular.
• C) for dividend policy to become even more irrelevant.
• D) none of the above.

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Definitions:

Direct Corporate Contributions

Financial or in-kind contributions made by a corporation directly to a political candidate, party, or campaign, often regulated to prevent undue influence.

Quid Pro Quo Corruption

A type of corruption involving a direct exchange of goods or services for personal gain or influence, where one party offers something to another in return for a favor.

Express Powers

Powers explicitly granted to an entity or individual by statutes or in a legal document, such as a constitution or contract.

Double Taxation

The imposition of tax on the same income, asset, or financial transaction at two different levels of government, for example, corporate profit followed by personal income tax on dividends.