If dividends and capital gains are taxed at the same rate,should investors prefer cash dividends or stock repurchases?
A)They would prefer to have neither a dividend nor a stock repurchase.
B)It would not matter.Either cash dividends or stock repurchases would result in the same after-tax cash flow.
C)They should prefer cash dividends to stock repurchases.
D)They should prefer stock repurchases to cash dividends.

Question

Quizplus · Accepted Answer

If dividends and capital gains are taxed at the same rate, it would not matter whether investors receive cash dividends or stock repurchases, as both would result in the same after-tax cash flow. Therefore, the preference would depend on other factors such as the company's financial situation and the investor's personal preferences.

If Dividends and Capital Gains Are Taxed at the Same