Which of the Following Describes the Clientele Effect Concept of Dividend

question 129

Multiple Choice

Which of the following describes the clientele effect concept of dividend policy?

• A) The clientele effect looks at investor preferences for dividends compared to share repurchase programs.
• B) The clientele effect defines the relationship between the shareholder and a stockbroker.
• C) The clientele effect focuses entirely on the stability of dividends.
• D) Modern corporations do not consider shareholders to be "clients."

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Definitions:

Price of Capital

The cost of using capital assets in production, which can include interest rates on loans or opportunity costs of using owned capital.

Price of Labor

The wage or salary paid for the services of an employee or worker; essentially the cost of hiring labor.

Isocost Line

A line on a graph representing all combinations of inputs that have the same total cost.

Price of Capital

The cost of using capital goods, such as machinery or buildings, often expressed in terms of interest rates or rental rates.