2. Other dividend policy issues Despite the theoretical assertions of proponents of the dividend irrelevance theory, many investors do care about dividends. The table lists some factors that might affect an investor's preference for dividends. Indicate whether each factor is likely to make an investor prefer to receive more or fewer dividends. Factor Prefer More Dividends Prefer Fewer Dividends Dividends are taxed in the year they are received, while capital gains are taxed when the stock is sold. O O An investor is on a fixed income and depends upon returns from investment. O The value of a dividend received today is known, but the value of a capital gain received in the future is uncertain. o Sportdyne Inc. is a typical company that is very concerned with meeting investors' expectations and keeping investors happy. Its earnings tend to fluctuate from year to year because of the nature of the business the company is in. Which of these statements most likely describes Sportdyne Inc.'s dividend policy? Sportdyne Inc. will pay a stable, predictable dividend because it will lower the firm's Is and increase the value of the firm, Sportdyne inc. will use a residual dividend policy because it will increase the firm's T and increase the value of the firm