Which of the following statements about dividend policies is correct? 1. Compani

Question

Which of the following statements about dividend policies is correct? 1. Companies pay high dividends because it reduces taxable income 2. One reason that companies tend to avoid stock repurchases is that dividend payments are taxed at a lower rate than gains on stock repurchases. 3. One advantage of dividend reinvestment plans is that they allow shareholders to avoid paying taxes on the dividends that they choose to reinvest. 4. One advantage of dividend reinvestment plans is low brokerage costs because of volume purchases 5. none of the above

Explanation / Answer

option 4

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