Client effect implies that:
a) investors prefer high dividend paying shares
b) investors have varying preferences regarding dividends
c) low tax bracket investors are indifferent do dividends
Answer: Option b is correct.
The varying preferences for dividends among the investors is known as clientele or client effect.
Client effect implies that: a) investors prefer high dividend paying shares b) investors have varying preferences...
The clientele effect implies that: (a) investors prefer high dividend paying shares (b)investors have varying preferences regarding dividends (c) low tax bracket investors are in different to dividends
5. (Dividends and share repurchases: Analysis) The clientele effect implies that: (a) investors prefer high dividend paying shares (b) investors have varying preferences regarding dividends (c) low tax bracket investors are indifferent to dividends
Which of the following statements regarding dividends and dividend policy is LEAST true? A. With no taxes, the idea of homemade dividends implies that dividend policy doesn't matter. B. A stock repurchase may be a preferable alternative to dividends, for investors in higher tax brackets. C. The clientele effect suggests that investors prefer higher dividend paying stocks. D. The signalling effects of dividends imply that a firm may be able to increase firm value by increasing dividends
(W8C19.20) (T/F) In the Tax Effect Theory of Dividends, investors prefer a higher dividend payout so they can write more off on their taxes. Select one: True False
The book-to-market effect implies that shares of companies with _____ ratios tend to _____ the market. a) low book-to-market; outperform b) high P/E; underperform c) high book-to-market; outperform d) high P/E; outperform e) high book-to-market; underperform
1. Dividend policy A firm’s value depends on its expected free cash flow and its cost of capital. Distributions made in the form of dividends or stock repurchases impact the firm’s value and the investors in different ways. Some analysts have argued that a firm’s value should solely be determined by its basic earning power and the business risk of the firm. Which of these concepts would support these analysts’ argument? A. The signaling hypothesis B. Dividend irrelevance theory C....
12. Dividend policy A firm’s value depends on its expected free cash flow and its cost of capital. Distributions made in the form of dividends or stock repurchases impact the firm’s value and the investors in different ways. Some analysts have argued that a firm’s value should solely be determined by its basic earning power and the business risk of the firm. Which of these concepts would support these analysts’ argument? The signaling hypothesis The clientele effect Dividend irrelevance theory...
Which of the following statements is false? A. If investors have a high disagreement concerning the value of a publicly traded firm, and it is also difficult to short sell the firm’s shares, then the firm’s stock might become overpriced. B. During bubbles, the behavior of many investors appears irrational. C. Most tests of technical analysis strongly suggest that past returns and other market generated data can be easily exploited to create portfolios that generate positive alphas. D. Portfolios of...
Suppose that there are just three types of investors with the following tax rates: Individuals Corporations Institutions Dividends 35% 20% 0% Capital gains 18 8 0 Individuals invest a total of $81.5 billion in stock and corporations invest $11.80 billion. The remaining stock is held by the institutions. All three groups simply seek to maximize their after-tax income. These investors can choose from three types of stock offering the following pretax payouts per share: Low Payout Medium Payout High Payout...
Stock Expected Dividend Expected Capital Gain A $0 $10 B $5 $5 C $10 $0 A. If each stock is priced at $110, what are the expected net percentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 35% (the effective tax rate on dividends received by corporations is 10.5%), and (iii) an individual with an effective tax rate of 15% on dividends and 10% on capital gains? (Do...