The Effective Dividend Tax Rate for a Buy and Hold

question 78

Multiple Choice

The effective dividend tax rate for a buy and hold individual investor in 1999 is closest to:

• A)25%
• B)0%
• C)20%
• D)40%

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Definitions:

Precautionary Motive

The desire to hold cash or liquid assets to safeguard against future uncertainties and unplanned expenses.

Speculative Motive

The intention to hold cash for the purpose of taking advantage of future opportunities that may arise, such as bargain purchases or earning profits from price changes.

Investment Opportunities

Investment opportunities refer to avenues where individuals or entities can invest their resources with the expectation of generating a future financial return.

Float Motive

The reason businesses hold onto cash for transactional purposes, allowing them to meet short-term obligations without liquidating investments.