Stockholders may prefer dividends to reinvestment by the firm

Question

Quizplus · Accepted Answer

A) Dividends resolve some uncertainty because they provide a predictable income stream for investors.
B) Dividend payments have an information content because they signal to investors that the company is profitable and financially stable enough to distribute profits.
C) Investors may prefer current cash to future cash, as they may have immediate needs for the cash or prefer to reinvest the dividends themselves.

Stockholders May Prefer Dividends to Reinvestment by the Firm