Of the Following Factors, Which One Is Considered to Be

question 22

Multiple Choice

Of the following factors, which one is considered to be the primary factor affecting a firm's dividend decision?

• A)personal taxes of company stockholders
• B)consistent dividend policy
• C)attracting retail investors
• D)attracting institutional investors
• E)sustainable changes in earnings

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Definitions:

Dividend Income

Income received from owning shares of a company that pays dividends, which is a portion of the company's earnings distributed to shareholders.

Dividend Preference Theory

A theory that suggests investors prefer dividends over future capital gains because dividends provide certainty.

"A bird in hand"

A principle implying that it is better to have a certain, smaller benefit now than a possibility of a greater benefit later, often used in dividend policy discussions.

Future Earnings

Projected or anticipated profits a company expects to earn in future periods, often used for valuation purposes.