Question
The following statements regarding optimal dividend policy are correct: a.When the corporate tax rate is increased relative to personal tax rates, it becomes more beneficial
The following statements regarding optimal dividend policy are correct:
a.When the corporate tax rate is increased relative to personal tax rates, it becomes more beneficial to increase payout to shareholders.
b.To mitigate agency problems between managers and shareholders, firms should reduce their dividend payments.
c.Assuming perfect capital markets and only corporate taxes, firms that invest excess cash in government bonds should delay dividend payments to maintain a steady stream of earnings from these bonds.
d.(a), (b), and (c)
e.(a) and (b)
f.(a) and (c)
g.(b) and (c)
h.None of the above.
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