Question

At current tax rates, which of the following investors are most likely to hold a stock...

At current tax rates, which of the following investors are most likely to hold a stock that has a high dividend yield?

Individual investors

Pension funds

Mutual funds

Corporations

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Pension funds tend to have higher share of stocks with high dividend yield because they need to make periodic payments to their beneficiaries. Furthermore, pension funds are tax exempt so there is no issue with the tax rate.

individual investors, mutual funds and corporations will have to pay taxed when taking dividend. So these do not prefer stocks with high dividend yield because that would mean that they are incurring tax regularly and paying taxes at a higher rate because dividend is generally taxed higher than long term capital gain

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Which of the following actions would be most likely to reduce potential conflicts of interest between...
Which of the following actions would be most likely to reduce potential conflicts of interest between stockholders and managers? a.   Decrease the proportion of executive compensation that comes from stock options and increase the proportion that is paid as cash salaries. b.   Change the corporation's formal documents to make it more difficult for outside investors to acquire a controlling interest in the firm through a hostile takeover. c.   The percentage of the firm’s stock that is held by institutional investors such as mutual...
Which of the following is the most likely action of investors with representativeness bias? A. They...
Which of the following is the most likely action of investors with representativeness bias? A. They hold onto loser stocks for too long to avoid regret. B. They infer that good companies are also good investments. C. They buy the stocks other investors buy. D.They attribute to bad luck any loss of money. Which of the following is a characteristic of an overconfident investor? A. They tend to trade too much because they believe more strongly in their own valuation...
A firm’s value depends on its expected free cash flow and its cost of capital. Distributions...
A firm’s value depends on its expected free cash flow and its cost of capital. Distributions made in the form of dividends or stock repurchases impact the firm’s value and the investors in different ways. Consider the scenario, and answer the questions that follow: Suppose a firm generates a lot of cash but has limited investment opportunities. Is this stock more likely to be a utility stock or a technology stock? In addition, is the stock more likely to have...
Suppose that there are three types of investors with the following tax rates: Individuals Corporations Institutions...
Suppose that there are three types of investors with the following tax rates: Individuals Corporations Institutions Dividends 30% 5% 0% Capital gains 15% 30% 0% Individuals invest a total of $80 billion in stock and corporations invest $10 billion. The remaining stock is held by the institutions. All three groups simply seek to maximize their after-tax income. These investors can choose from three types of stock offering the following pre-tax payouts per share: Low Payout Medium Payout High Payout Dividends...
Which of the following statements is most likely an incorrect statement? Most ETFs track a stock...
Which of the following statements is most likely an incorrect statement? Most ETFs track a stock index; those that track a bond index or invest in commodities, such as gold, are not that common. ETFs have expense ratios that are typically lower than those of the average mutual fund. Unlike mutual funds, ETFs are traded on a stock exchange, provide the ability to sell short and buy on margin. An ETF is a type of fund that divides ownership of...
Which of the following statements regarding bond prices and market interest rates are most likely to...
Which of the following statements regarding bond prices and market interest rates are most likely to be true? Interest rate risk can be described as the changes in market interest rates that will cause fluctuations in a bond’s price. Bond prices and market interest rates are negatively related to each other. Coupon paying bonds will trade at a premium to their face value because of the future cash flows expected by bond investors.
Which of the following factors MOST often prevents the ITA from achieving perfect integration between corporate...
Which of the following factors MOST often prevents the ITA from achieving perfect integration between corporate and individual​ taxes? A. varying federal tax rates B. the application of different tax rates to individuals and corporations C. varying provincial tax rates D. the application of different tax rates to different types of corporations
Which of the following statements is most likely NOT reflective of the mutual fund industry trend...
Which of the following statements is most likely NOT reflective of the mutual fund industry trend over time? The mutual fund industry has grown in popularity over time in the last 5-10 years. The size of the US regulated fund industry is relatively larger than other parts of the world. The total net assets of regulated funds do not vary widely by geographic region despite the differences in culture and in capital market developments. The COVID-19 pandemic has had some...
31. Which of the following problems would most likely be a concern for life insurance companies...
31. Which of the following problems would most likely be a concern for life insurance companies that are worried about differentiating between good risks and bad risks? A. Adverse selection B. Catastrophe risk C. Longevity risk D. Moral hazard 32.Which of the following statements regarding the capital requirements and regulation of insurance companies is correct? A. Insurance companies are regulated at both the state and federal level. B. The guaranty system for insurance companies consists of a permanent fund created...
Which of the following stocks is likely to be the most sensitive to market fluctuations? A...
Which of the following stocks is likely to be the most sensitive to market fluctuations? A stock with a high standard deviation A stock with a high beta A stock with a low correlation with the market A stock with a low standard deviation A stock with a low beta
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT