Relative to Local (Foreign) Competition, Foreign-Source Income Is Most Valuable

question 25

Multiple Choice

Relative to local (foreign) competition, foreign-source income is most valuable to a U.S.-based firm when ______.

• A) the income is from a low-tax country and the firm has excess foreign tax credits
• B) the income is from a high-tax country and the firm has excess foreign tax credits
• C) the income is from a low-tax country and the firm has no excess foreign tax credits
• D) the income is from a high-tax country and the firm has no excess foreign tax credits
• E) None of the above

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Definitions:

Stocks

Shares of ownership in a corporation, giving holders a claim on the company's earnings and assets.

Portfolio

An assortment of financial assets including stocks, bonds, commodities, currency, and equivalents, along with closed-end funds and exchange-traded funds (ETFs).

Securities

Financial vehicles that embody a part-ownership in a corporation traded on the stock market, a credit relationship with governmental organizations or companies (bonds), or the potential ownership conferred by holding options.

Treasury Bills

Short-term government securities issued at a discount from the face value and maturing at par, offering a return to investors.