The Clientele Argument in Dividend Theory Implies That

question 11

Multiple Choice

The clientele argument in dividend theory implies that:

• A)investors are indifferent between dividends and capital gains.
• B)firms should pay out dividends only after accepting all capital budgeting projects with positive NPVs.
• C)the stock of low-payout firms will be held by investors seeking capital gains.
• D)the dividend payout should be set equal to the industry average.

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Definitions:

Tidal Volume

The amount of air that is inhaled or exhaled during a normal breath.

Vital Capacity

The maximum amount of air a person can expel from the lungs after a maximum inhalation.

Total Lung Capacity

The maximum volume of air that the lungs can hold.

Tracheostomy

Creation of an opening into the trachea through the neck.