The common stock of Pierson Enterprises has historically had a high dividend yield and is expected to continue to do so.As a result,the majority of its shareholders are individuals and entities that are seeking a regular source of cash income.Most of these shareholders pay either no taxes or a relatively low amount of taxes.The fact that most of these shareholders have similar characteristics is referred to by which one of the following terms?
A)information content effect
B)clientele effect
C)efficient markets hypothesis
D)distribution effect
E)market reaction effect

Question

Quizplus · Accepted Answer

The fact that most shareholders of Pierson Enterprises have similar characteristics (being individuals and entities seeking regular cash income and paying low taxes) is referred to as the clientele effect. This term describes the phenomenon of certain types of investors being attracted to certain types of stocks based on their investment objectives and tax situations.

The Common Stock of Pierson Enterprises Has Historically Had a High