Question

Different payout policies will attract different types of investors due to the _______.

Answer 1

Due to the clientele effect, different payment policies will draw various types of investors.

What is Clientele effect?

• The clientele effect is a frequent occurrence when shareholder desires have an impact on stock prices.
• The way that a certain category of stocks is sought after by individual investors is one aspect of the clientele effect.
• Dividend clientele, a term denoting a group of stockholders who have similar views on how a certain firm handles its dividend policy, is an example of this effect in action.
• The clientele effect is a shift in share price brought on by business choices that prompts investor responses.
• The clientele effect discusses how the needs and objectives of a company's investors can affect its stock price.
• According to the clientele effect, when a firm changes one or more of its policies, certain investors' stock holdings will change in accordance with their initial attraction to those policies.

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