Typically,all other things equal,a profitable company that pays relatively high dividends:
A)is an attractive investment for those seeking growth.
B)will reinvest less profit which can lead to smaller growth potential.
C)will experience more growth in stock price over time.
D)all of the answers are acceptable.

Question

Quizplus · Accepted Answer

A profitable company that pays high dividends will have less profit available for reinvestment, which can lead to a smaller growth potential. Therefore, choice B is the best answer. Choice A is incorrect because investors seeking growth would typically invest in companies that reinvest profits to fuel growth. Choice C is incorrect because the correlation between dividend payouts and stock price growth is not always clear-cut. Choice D is incorrect because not all of the answers are acceptable.

Typically,all Other Things Equal,a Profitable Company That Pays Relatively High