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1. Assume that the tax on dividends and the tax on capital gains is the same. Al

ID: 2672170 • Letter: 1

Question

1. Assume that the tax on dividends and the tax on capital gains is the same. All else equal, what would a prudent investor prefer?

A.The prudent investor would be indifferent between receiving dividends or capital gains.
B. The prudent investor would prefer dividends?a dollar today is always worth more than a dollar to be received in the future.
C. The prudent investor would prefer capital gains?the capital gain tax liability can be deferred until gains are realizedD. More information is needed

Explanation / Answer

The answer is Assume that the tax on dividends and the tax on capital gains is the same.

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