Which of the Following Statements Is Most Correct

question 28

Multiple Choice

Which of the following statements is most correct?

• A) If a firm repurchases its stock in the open market, the shareholders that tender are subject to capital gains taxes.
• B) If you own 100 shares in a company's stock, and the company does a 2- for-1 stock split, you will own 200 shares in the company following the split.
• C) Some dividend reinvestment plans increase the amount of equity capital available to the firm.
• D) All of the statements above are correct.
• E) Answers a and b are correct.

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Definitions:

Total Income

Total Income refers to the aggregate earnings of an individual or organization from all sources before any deductions are made.

Benefits-received Principle

The concept that individuals should pay taxes in proportion to the benefits they receive from government services.

Gasoline Tax

A levy imposed by governments on the sale of gasoline, used primarily to fund transportation initiatives.

Lump-sum Tax

A fixed tax amount not dependent on the taxpayer's income level or financial transactions.