The common stock of Dayton Dry Goods has historically had a low dividend yield that is expected to continue. As a result, the majority of its shareholders are individuals who prefer capital gains over cash dividends for tax reasons. The fact that most of these shareholders have similar characteristics is referred to as the ________ effect.

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Quizplus · Accepted Answer

The description provided in the question is referring to the clientele effect. This is when a company's stock is more attractive to a certain type of investor based on its dividend yield and other characteristics, leading to a concentration of shareholders with similar preferences.

The Common Stock of Dayton Dry Goods Has Historically Had