What Important Tax-Based Reason Suggests Why Some Investors Might Prefer

question 59

Multiple Choice

What important tax-based reason suggests why some investors might prefer capital gains?

• A) Investors pay taxes only on dividends, not on capital gains.
• B) Investors pay capital gains taxes as their stock appreciates, not at the time of sale, so they will be indifferent to selling the stock.
• C) Investors who don't need or want any cash will not accept their dividend and they therefore will not incur any obligation to pay taxes.
• D) Investors who don't need or want any cash will not sell their stock and they therefore will not incur any obligation to pay taxes.

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Definitions:

Deemed to Accept

An assumed or implicit acceptance of terms or conditions by conduct or by failing to object.

Reasonable Opportunity

A fair and adequate chance given to a party to perform an action or fulfill a condition within legal or contractual obligations.

Destination Contract

A contract specifying that the sale of goods will be completed upon their arrival at a specified location.

F.O.B. City

Refers to "Free on Board" at a certain city, indicating that the seller is responsible for the goods until they are loaded onto a transport vehicle at a specified location.