Question

Which one of the following favors a low dividend policy? A) The tax on capital gains is deferred until the gain is realized. E) The presence of an agency conflict with the company's senior managers. C) A majority of the shareholders have a low tax rate. D) A majority of the shareholders have better investment opportunities than the firm. B) Few, if any, positive net present value projects are available to a firm.

Answer 1

Answer: the tax on capital gains is deferred until the gain is realized

Explanation:

A low dividend payout is a situation that occurs when the majority of w company's profit are kept and then reinvested in the business while the rest will be shared as dividends.

A low dividend policy is favored when the tax on capital gains is deferred until the gain is realized.