Which of the following is not a logical justification for dividend preference (versus capital gains) in the real world?
A)institutional restrictions involving dividends.
B)higher share prices from higher payouts.
C)a steady source of cash without transaction costs.
D)differing income tax rates.

Question

Quizplus · Accepted Answer

While higher payouts may lead to higher share prices in theory, this is not always the case in the real world due to various market factors and investor behavior. The other options (institutional restrictions, steady source of cash without transaction costs, and differing income tax rates) are all valid reasons for dividend preference.

Which of the Following Is Not a Logical Justification for Dividend