Different Investor Groups Have Differing Dividend Policy Preferences That Create

question 43

True/False

Different investor groups have differing dividend policy preferences that create clientele effects in which dividend policy of a firm is optimized for its investors.

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Definitions:

Income Elasticity

A measure of how much the demand for a good will change in response to a change in consumers' income.

Inferior Good

An inferior good is a type of good whose demand decreases when consumer income rises, in contrast to normal goods, whose demand increases with rising incomes.

Shoes

Footwear items designed to protect and comfort the human foot while offering various styles and functions.

Income Elasticity

Measures how the quantity demanded of a good changes in response to a change in consumers' income.