Identify Which of the Following Statements Is True

question 16

Multiple Choice

Identify which of the following statements is true.

• A) Shareholders who acquire stock in an S corporation after the election date and prior to the election's effective date must consent to the election.
• B) Only shareholders who own stock on the date an S election takes effect must consent to the election.
• C) S corporation consent by shareholders is binding on the current tax year and all future tax years.
• D) All of the above are false.

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Definitions:

HML Beta

A measure used in finance to assess the sensitivity of an asset or portfolio to a value factor, defined as high minus low book-to-market stocks.

SMB Beta

Stands for Small Minus Big Beta, a metric used in finance to measure a stock's sensitivity to the SMB factor, which represents the excess return of small-cap stocks over large-cap stocks.

Market Beta

A measure of a stock's volatility in relation to the overall market; indicates the stock's sensitivity to market movements.

Factor Portfolio

A portfolio constructed to have a high sensitivity to specific risk factors, aiming to capture the risk premiums associated with those factors.