Corporations May Have a Legitimate Preference for Dividends Over Capital

question 69

Multiple Choice

Corporations may have a legitimate preference for dividends over capital gains because:

• A)Capital gains have a 50% tax rate
• B)Dividends received by corporations are not taxable
• C)30% of dividends received by corporations are exempt from taxation
• D)70% of dividends received by corporations are exempt from taxation

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Definitions:

Equivalent

Items or quantities having the same value, function, or meaning, often used in comparisons.

Annually Compounded Rate

The interest rate calculated once per year, taking into account the effect of compounding over that period.

Bank Balance

The total amount of funds in a bank account at a given moment.

Deposited

Placing money into a financial account or institution for safekeeping or to earn interest.