Which of the following statements is true?

Question

Quizplus · Accepted Answer

Retaining profits instead of paying dividends typically suggests that a company intends to reinvest those profits into the business, which may lead to future growth and higher earnings. This can attract more investors and increase demand for the stock, leading to a rise in price.

B, C, and D are false statements. Investors typically have to pay taxes on dividend earnings, dividend earnings can be reinvested, and the annual capital-gains yield on a stock can sometimes be greater than the annual dividend yield.

Which of the Following Statements Is True