Empirical Testing Has Confirmed the Validity of Which of the Following

question 107

Multiple Choice

Empirical testing has confirmed the validity of which of the following attitudes concerning dividends?

• A) Dividend irrelevance,or Modigliani-Miller,theory.
• B) Investors prefer dividends to capital gains because dividends are more certain.
• C) Investors prefer capital gains to dividends because capital gains are taxed at more favorable rates.
• D) Empirical testing has produced some evidence in support of each of the theories above.
• E) Empirical testing has not produced any definitive results.

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Definitions:

Fixed Cost

Expenses that do not change with the level of goods or services produced, such as rent, salaries, or loan payments.

Variable Cost

Costs that vary directly with the level of production or service activity, such as materials or labor costs.

Attractive Location

A place considered desirable for living, working, or setting up a business due to its advantages like accessibility, scenery, or economic opportunity.

Fixed Costs

Expenses that do not change in proportion to the level of production or sales, such as rent, salaries, and equipment leases.