Which of the Following Statements Would Be Consistent with the Residual

Multiple Choice

Which of the following statements would be consistent with the residual dividend theory?

A) Wealthy investors prefer corporations to defer dividend payments because capital gains produce greater after-tax income.
B) Dividends are more certain than capital gains.
C) Dividends should only be paid if a firm has profits in excess of the amount needed to finance the current year's capital investments.
D) Investors are indifferent whether stock returns come from dividend income or capital gains income.