According to economists, in a frictionless world, firms dividend policy does not affect shareholders wealth. However, firms that pay dividends are rewarded with higher valuations, a phenomenon known as Dividend Puzzle.

Given this, which of the following US investors have tax reasons to prefer cash dividend over share repurchase?

I. Pension Fund

II. High wealth individual investor

III. Corporation

IV. Education endowment

select one answer:

A. I

B. IV

C. III

D. II

E I, III and IV