Dividend Payments That Are the Result of Liquidation of Assets

question 104

Multiple Choice

Dividend payments that are the result of liquidation of assets are known as ________ and are taxed as capital gains.

• A) return of capital
• B) rolling dividends
• C) alternate payments
• D) private earnings

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Definitions:

Fad Effect

A temporary period of high demand for a certain product or service, often without a basis in the product's qualities or utility.

Liquidity Effect

The impact that changes in the supply of money have on interest rates, typically where an increase in money supply leads to a decrease in interest rates.

Neglected-firm Effect

The phenomenon where lesser-known or less-followed stocks generate higher abnormal returns than their well-followed counterparts.

Excess Returns

The return on an investment that exceeds a benchmark or risk-free rate, indicating the additional compensation for taking on risk.