Which of the following statements is correct? Investors might prefer dividends over capital gains because of the Time Value of Money-related benefit that a dollar of taxes paid tomorrow has a higher effective cost than a dollar of taxes paid today. A. Investors might prefer capital gains over dividends because, while taxes on dividends are due in the year they are received, taxes on capital gains are not due until the stock is sold. Investors might prefer dividends over capital gains because they want to avoid transaction costs associated with the reinvestment of funds into the firm. Investors might prefer capital gains because they perceive that capital gains are less risky than dividends.