Consider the following statements: If dividends are taxed more heavily than capital gains, then investors: I. Should pay more for stocks with low dividend yields. II. Should pay more for stocks with high dividend yields. III. Should pay the same for stocks with high or low dividend yields. IV. Should accept a lower pre-tax rate of return from stocks with high dividend yields. V. Should accept a lower pre-tax rate of return from stocks with low dividend yields. Which of the statements is true? a II only b III only c I and IV only d I and V only e I onl
Consider the following statements: If dividends are taxed more heavily than capital gains, then investors: I. Should pay more for stocks with low dividend yields. II. Should pay more for stocks with high dividend yields. III. Should pay the same for stocks with high or low dividend yields. IV. Should accept a lower pre-tax rate of return from stocks with high dividend yields. V. Should accept a lower pre-tax rate of return from stocks with low dividend yields. Which of the statements is true? a II only b III only c I and IV only d I and V only e I onl
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Consider the following statements:
If dividends aretaxed more heavily than capital gains , then investors:
I. Should pay more for stocks with low dividend yields.
II. Should pay more for stocks with high dividend yields.
III. Should pay the same for stocks with high or low dividend yields.
IV. Should accept a lower pre-taxrate of return from stocks with high dividend yields.
V. Should accept a lower pre-tax rate of return from stocks with low dividend yields.
If dividends are
I. Should pay more for stocks with low dividend yields.
II. Should pay more for stocks with high dividend yields.
III. Should pay the same for stocks with high or low dividend yields.
IV. Should accept a lower pre-tax
V. Should accept a lower pre-tax rate of return from stocks with low dividend yields.
Which of the statements is true?
a
II only
b
III only
c
I and IV only
d
I and V only
e
I only
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