Which of the following statements is false?
A)Resident investors,who have marginal tax rates equal to or less than the company tax rate,will always prefer that companies pay dividends instead of retaining profits.
B)The payment of dividends,franked or unfranked,can reduce future capital gains tax.
C)An unexpected increase in dividends should cause an increase in the market's expectation of future earnings.
D)None of the given options.

Question

Quizplus · Accepted Answer

Statement A is false because the preference for dividends over retained profits depends on individual investor circumstances, including their tax situation and investment goals. Some investors might prefer retained profits for reinvestment and potential capital appreciation, especially if their marginal tax rate is lower than the company tax rate, as they might benefit more from the deferral of personal tax or lower capital gains tax upon selling the shares.

Which of the Following Statements Is False