Question
Which of the following statements about dividend is NOT true? _____ Dividend Irrelevance Theory says that Investors are indifferent between dividends and retention-generated capital gains.
- Which of the following statements about dividend is NOT true? _____
| Dividend Irrelevance Theory says that Investors are indifferent between dividends and retention-generated capital gains. If they want cash, they can sell stock. If they dont want cash, they can use dividends to buy stock. | |
| Tax Preference Theory indicates that low dividend payments mean higher capital gains. Capital gains taxes are lower than dividend taxes, and they can be deferred. So investors prefer low-dividend-payments or non-dividend-payments firms. | |
| Based on the Bird-in-the-hand theory, a firm should set high dividend payout ratio to increase firm value. | |
| Tax preference theory Implies payout policy has no effect on stock value or the required return on stock. |
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