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# Company treasurer: Even if the dividend payments that companies make

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Company treasurer: Even if the dividend payments that companies make  [#permalink]

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06 Jul 2020, 07:25
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Company treasurer: Even if the dividend payments that companies make to their shareholders were to be taxed at a higher rate, I believe that our stock price would not be negatively affected. Dividend-paying stocks like ours have performed exceptionally well during the last few years, providing investors with greater returns than most other investment options. As the population ages, there will be even more demand for the income provided by dividend-paying stocks. Although retail investors will be greatly affected by a higher dividend tax, it is important to recognize that the majority of our company’s stock is owned by institutional investors that are exempt from dividend taxation.

According to the information provided, the treasurer's primary focus is to discuss the potential effect that an increase in the _____1____ could have on the ____2_____.

Select for 1 and for 2 the options that complete the statement in the manner that most accurately reflects the given information. Make only two selections, one in each column.

 1 2 Statements company's stock price dividend tax rate number of institutional investors tax paid by institutional investors company’s dividend payments

Spoiler: :: OA
1: dividend tax rate
2: company's stock price

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Company treasurer: Even if the dividend payments that companies make  [#permalink]

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06 Jul 2020, 20:46
1. company's dividend payments
2.dividend tax rate?
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Re: Company treasurer: Even if the dividend payments that companies make  [#permalink]

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06 Jul 2020, 23:35
theHermes5 wrote:
1. company's dividend payments
2.dividend tax rate?

Official Explanation

RO1

The comments made by the company treasurer focus on what would happen if dividend payments … were to be taxed at a higher rate. Thus, an increase in the dividend tax rate most logically completes blank #1.

The correct answer is dividend tax rate.

RO2

The company treasurer’s opening statement claims that if the dividend tax rate increases, our stock price would not be negatively affected. The remainder of the argument provides support for that claim. The other options provided—number of institutional investors, tax paid by institutional investors, and company’s dividend payments—are all discussed in the context of emphasizing that the company’s stock price would not be negatively affected by an increase in the dividend tax rate.

The correct answer is company’s stock price.

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Re: Company treasurer: Even if the dividend payments that companies make  [#permalink]

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07 Jul 2020, 01:17
1)Dividend tax rate increment is discussed by the treasurer sinceh e is looking at the pros and cons and also the group of people who will be impacted by the Increase in taxes,and he is also measuring the negative impact put on by the Increase in taxes.

2) Company stock price since ultimately if the stock price gets impacted the investor behaviour will change and the company might loose current investors with a kind of negative image created of loss,thus harming the company

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Re: Company treasurer: Even if the dividend payments that companies make   [#permalink] 07 Jul 2020, 01:17