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NEW QUESTION: 1
Suppose capital gains are taxed at 28% and realized income is taxed at 40%. The tax preference theory implies that as the dividend pay-out ratio is increased, the stock price:
A. remains unaffected.
B. increases or decreases.
C. increases.
D. decreases.
Answer: D
Explanation:
Explanation/Reference:
Explanation:
Since the capital gains tax rate is lower than the realized income tax rate, investors would prefer to defer the realization of this income through the capital gains component. Hence, increasing the payout ratio will make the stock less attractive and depress the price.
NEW QUESTION: 2
Assume you are working in a division in your country's Department of Interior. The Department is set up in Bureaus, and your work falls within Natural Resources. Your division is the Water Resource Division. You are responsible as the portfolio manager for the work in this Division. As you work on the portfolio for the upcoming year, you point out to the members of the Portfolio Review Committee that:
A. Your portfolio reflects your Division's objectives
B. Your portfolio addresses different strategies than those in other parts of the Department
C. Each program and project in the portfolio have related objectives
D. The projects in the portfolio have interdependencies between them
Answer: B
NEW QUESTION: 3
A. Option A
B. Option D
C. Option B
D. Option C
Answer: B
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