Which of the Following Statements Is FALSE

question 21

Multiple Choice

Which of the following statements is FALSE?

• A)When a firm pays a dividend,shareholders are taxed according to the dividend tax rate.If the firm repurchases shares instead,and shareholders sell shares to create a homemade dividend,the homemade dividend will be taxed according to the capital gains tax rate.
• B)When the tax rate on dividends exceeds the tax rate on capital gains,shareholders will pay lower taxes if a firm uses share repurchases for all payouts rather than dividends.
• C)Firms that use dividends will have to pay a lower pre-tax return to offer their investors the same after-tax return as firms that use share repurchases.
• D)The optimal dividend policy when the dividend tax rate exceeds the capital gain tax rate is to pay no dividends at all.

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Definitions:

Probability

A branch of mathematics concerned with measuring the likelihood of a specific event's occurrence, expressed as a number between 0 and 1.

One Seizure

One seizure refers to a single episode of abnormal electrical activity in the brain leading to various symptoms like convulsions, sensory disturbances, or loss of consciousness.

Lifetime

The duration of existence of an individual or the period during which an object is functional or can be expected to perform its intended function.

Neurocognitive Disorders

A category of conditions that affect cognitive function, including memory, problem-solving, attention, and perception, due to brain damage or disease.