Other Things Equal,an Increase in the Tax on Dividends Is

question 58

Multiple Choice

Other things equal,an increase in the tax on dividends is likely to result in all of the following EXCEPT

• A) higher expected return on bonds relative to stocks.
• B) increased demand for bonds.
• C) lower interest rates.
• D) higher interest rates.

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Definitions:

Required Rate of Return

The minimum return an investor expects to receive on an investment to compensate for its risk.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.

Working Capital

The distinction between a corporation's short-term assets and liabilities, showing the available capital for operational purposes.

Fast-Food Chain

A series of restaurants serving food quickly and standardized in method and by the same brand name.