Which of the Following Is True Regarding Tax-Advantaged Assets

question 102

Multiple Choice

Which of the following is True regarding tax-advantaged assets?

• A) They are typically subject to excise taxes to account for their low explicit taxes.
• B) A corporate bond is typically considered a tax-advantaged asset.
• C) They are often subject to implicit taxes.
• D) A corporate bond is typically considered a tax-advantaged asset and They are often subject to implicit taxes are correct but not They are typically subject to excise taxes to account for their low explicit taxes.
• E) None of the choices are correct.

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Definitions:

Borrowing

The act of receiving something with the intention to return it, often referring to money from a lender under agreed terms.

DFL

Usually refers to Degree of Financial Leverage, a ratio that measures the sensitivity of a company's earnings per share to fluctuations in its operating income, as affected by changes in its capital structure.

EBIT

Earnings Before Interest and Taxes, an indicator of a company's profitability excluding interest and income tax expenses.

Interest Expense

The cost incurred by an entity for borrowed funds, typically paid to lenders as interest on loans.