Which Statement Is False Regarding Capital Structure Under Dividend Imputation

question 30

Multiple Choice

Which statement is false regarding capital structure under dividend imputation?

• A)Misleading results regarding the gain from leverage may appear if a company is not at its optimal dividend policy.
• B)Dividend policy decisions are probably more important than capital structure decisions.
• C)It is not possible to have a negative gain from leverage.
• D)If the dividend payout ratio is 1,a gain from leverage may result,providing that investors with equal marginal tax rates hold equity and debt.

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Definitions:

Positive-Sum Game

A situation in which all participants can gain or benefit in some way, contrasting with a zero-sum game.

Zero-Sum Game

A situation in economics or game theory where one party's gain is precisely balanced by another party's loss.

Dominant Strategy

In game theory, a strategy that is best for a player regardless of the strategies chosen by the other players.

Payoff

The return or profit from an investment or action.