Which of the Following Statements Is Most Correct

question 3

Multiple Choice

Which of the following statements is most correct?

• A)Retained earnings, as reported on the balance sheet, represents the amount of cash a company has available to pay out as dividends to shareholders.
• B)70% of the interest received by corporations is excluded from taxable income.
• C)70% of the dividends received by corporations is excluded from taxable income.
• D)Because taxes on long-term capital gains are not paid until the gain is realized, investors must pay the top individual tax rate on that gain.
• E)The corporate tax system favors equity financing, as dividends paid are deductible from corporate taxes.

---

Definitions:

Compounded Monthly

Interest calculation method where the interest amount is added to the principal sum so that the next interest calculation includes interest upon interest.

Principal Paid

The portion of a loan payment that goes toward reducing the original amount borrowed, distinct from interest or other fees.

Extra Payments

Additional payments made over the required minimum payment on debts like loans or mortgages, aimed at reducing the principal balance more quickly.

Total Interest

The total amount of interest paid over the lifetime of a loan.