Question $1(1$ point$)$

According to tax preference theory, when the tax rate on capital gains is less than or

equal to the tax rate on dividends, investors would prefer all payouts to be made in

the form of stock repurchases.

True

False

Question $2(1$ point$)$

Dividend tax rates for individual investors were higher than capital gains tax rates for

$1985,1995,$ and $1999.$

True

False

Question $3(1$ point$)$

From $1975$ to $2011,$ corporations decreased the proportion of cash payouts in

repurchases to pay out a greater portion of cash in the form of dividends.

True

False

Question $4(1$ point$)$

The clientele effect of dividends will likely prevent corporations from radically

changing their dividend payouts from one year to the next.

True

False

Question $5(1$ point$)$

When a firm announces a dividend increase, investors can view the announcement

as a credible signal about the firm's future prospects.

True

False