Which of the following statements is true?

Question

Quizplus · Accepted Answer

When an investor diversifies his investments, he spreads his money across different types of assets or securities. This reduces the total risk involved because if one investment performs poorly, the others may perform better and offset the losses. Therefore, option A is true.

Option B is false because dividends paid on stocks are often subject to taxes, depending on the country's tax laws.

Option C is false because retained earnings are the portion of a company's profits that are not distributed as dividends but are instead kept by the company for future investments or financial obligations. Increasing retained earnings does not necessarily mean an increase in dividends paid.

Option D is false because a company with higher retained earnings can indicate a financially stable and profitable company, which can increase investor confidence and potentially increase the stock price.

Which of the Following Statements Is True