Would would an investor prefer to receive a distribution as a dividend? Answers:Lower tax rate on dividends than capital gains Higher tax rate on dividends than capital gains Greater certainity Greater uncertainity

Dividend is a proportion of profit which is paid to shareholders when company has ample of funds.…

Answered: Would would an investor prefer to…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter12: Valuation: Cash-flow Based Approaches

Section: Chapter Questions

Problem 3QE

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Would would an investor prefer to receive a distribution as a dividend?


Answers:	Lower tax rate on dividends than capital gains
	Higher tax rate on dividends than capital gains
	Greater certainity
	Greater uncertainity

Definition Definition Tax imposed by the government on the "gain" or increase in the value of an asset at the time of its sale by the owner. Capital gain is computed based on the purchase price and sale price of the asset. If the sale price of the asset is more than the purchase price, there is a gain on the sale of asset. A tax is imposed on such gain in accordance with the applicable tax rates at the time of sale.

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