Question

Which of the following investors would likely prefer a cash dividend over a stock dividend?

a. Layton prefers when companies let him decide how to benefit from his dividends.
b. Kylie is a high-income earner and prefers to avoid additional taxes this year.
c. Harriett is more focused on long-term outcomes than short-term ones when it comes to investing.
d. Enrique subscribes to the "bird in the hand"theory when it comes to dividends.

Answer 1

Answer:

d. Enrique subscribes to the "bird in the hand "theory when it comes to dividends

Explanation:

Cash that is ready to use is better than having other assets that need to be converted into cash to be enjoyed later. This is the simple explanation of the "bird in the hand" theory. An investor who subscribes to this theory will highly likely prefer a cash dividend over a stock dividend.