Which Two Statements Accurately Describe the Taxation of Dividends and Loans

question 10

Multiple Choice

Which two statements accurately describe the taxation of dividends and loans?

• A) Interest payments on a loan are tax deductible.
• B) Dividends can be used to reduce a firm's taxable profits.
• C) Dividends are paid out of after- tax earnings.
• D) The company will generally prefer equity finance since it is more tax efficient.

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Definitions:

Obedience

The act of following the directives or commands from an authority figure, often studied in social psychology.

Commanding Authority

The power or right to give orders, make decisions, and enforce obedience.

Gender-Related Behavior

Actions or behaviors that are influenced by or associated with one's gender, often shaped by societal norms and expectations.

Foot-In-The-Door

A persuasion technique that involves getting a person to agree to a small request to increase the chances they will agree to a larger request later.