Which of the Following Statements Is TRUE

question 7

Multiple Choice

Which of the following statements is TRUE?

• A) There has traditionally been a tax advantage to paying dividends over capital gains.
• B) Investors like to be paid in dividends despite the tax inefficiency because of the agency problem.
• C) High-dividend taxes typically push firms to choose equity financing instead of debt financing.
• D) There is no reason for corporations or investors to have a preference between paying dividends or reinvesting profits.

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Definitions:

GDP

Gross Domestic Product (GDP) measures the total value of all goods and services produced over a specific time period within a country's borders.

GNI

Gross National Income, a measure of a country's total monetary value of all goods and services produced over a specified period, including net income from abroad.

Market Size

The total volume of sales or potential sales for all providers of a particular product or service within a specific market.

Population Growth

An increase in the number of individuals in a population, typically measured over a specific period of time.