A dividend clientele effect assumes that:
A)investors prefer higher rather than lower dividends.
B)shareholders are indifferent regarding dividends.
C)investors have specific dividend preferences.
D)investors are making "homemade" dividends.

Question

Quizplus · Accepted Answer

The dividend clientele effect assumes that investors have specific dividend preferences. This means that investors may choose to invest in companies that pay out a certain level of dividends that matches their preference, and may be deterred from investing in companies that do not match their preference. For example, an investor who prefers a higher dividend yield may only invest in companies that have a history of paying out high dividends.

A Dividend Clientele Effect Assumes That