Current Tax Laws Have Which of the Following Effects

question 24

Multiple Choice

Current tax laws have which of the following effects?

• A) Favor dividends because there are no capital gains taxes on dividends.
• B) Do not favor capital gains because the tax must be paid as the value of the stock increases,whether or not the stock is sold.
• C) Favor capital gains because the tax does not have to be paid until the stock is sold.
• D) Do not favor dividends or capital gains for most people because different people are in different tax brackets.
• E) Favor dividends since dividends are tax-deductible for the paying corporation whereas retained earnings,which produce capital gains,are not tax-deductible.

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Definitions:

365-Day Year

A standard year length used in some financial calculations, ignoring leap years.

Exact Simple Interest

Interest calculated precisely based on the principal amount, a fixed interest rate, and the number of days between payments.

365-Day Year

A method used in finance that assumes all years have 365 days for the purpose of interest calculation.

High-Speed Copy Machine

An office machine designed for rapid copying of documents and images, capable of producing numerous copies within a short period.