If Dividends and Capital Gains Are Taxed at the Same

question 99

Multiple Choice

If dividends and capital gains are taxed at the same rate,should investors prefer cash dividends or stock repurchases?

• A)They would prefer to have neither a dividend nor a stock repurchase.
• B)It would not matter.Either cash dividends or stock repurchases would result in the same after-tax cash flow.
• C)They should prefer cash dividends to stock repurchases.
• D)They should prefer stock repurchases to cash dividends.

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