Which of the Following Statements Is FALSE

question 17

Multiple Choice

Which of the following statements is FALSE?

• A)Future dividend payments and stock prices are not known with certainty;rather these values are based on the investor's expectations at the time the stock is purchased.
• B)The capital gain is the difference between the expected sale price and the purchase price of the stock.
• C)The sum of the dividend yield and the capital gain rate is called the total return of the stock.
• D)We divide the capital gain by the expected future stock price to calculate the capital gain rate.

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Definitions:

Extraordinary Gain

Profits that arise from events that are unusual, infrequent, and not expected to recur in the foreseeable future.

Accounting Principles

Guidelines and rules that govern the process of reporting financial information and preparing financial statements.

Deferred Tax Asset

An item on a company's balance sheet that is used to decrease future tax liability due to temporary timing differences in income recognition.

Warranty Costs

Expenses incurred by a company for repairing, replacing, or refunding products that have failed within the warranty period.