Which of the Following Is Generally NOT True and an Advantage

question 10

Multiple Choice

Which of the following is generally NOT true and an advantage of going public?

• A) Facilitates stockholder diversification.
• B) Increases the liquidity of the firm's stock.
• C) Makes it easier to obtain new equity capital.
• D) Establishes a market value for the firm.
• E) Makes it easier for owner-managers to engage in profitable self- dealings.

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Definitions:

Tax-Deferred Plans

Investment accounts that allow taxes on the principal and/or earnings to be paid at a future date instead of the year the investment earns income.

Pension Plan

A retirement plan that requires an employer to make contributions into a pool of funds set aside for a worker's future benefit.

IRA Contribution

Money placed into an individual retirement account (IRA) that may qualify for tax deductions or other tax advantages.

AGI

Adjusted Gross Income; a determinant of tax liability calculated by adjusting gross income for certain allowable deductions.