Which of the Following Statements Is True

question 29

Multiple Choice

Which of the following statements is true?

• A) Customers in high tax brackets would be more likely to take cash discounts and corporations in high tax brackets would be more likely to offer credit.
• B) Customers in high tax brackets would be more likely to take cash discounts and corporations in low tax brackets would be more likely to offer credit.
• C) Customers in low tax brackets would be more likely to take cash discounts and corporations in high tax brackets would be more likely to offer credit.
• D) Customers in low tax brackets would be more likely to take cash discounts and corporations in low tax brackets would be more likely to offer credit.
• E) Taxes have an effect on the propensity to grant credit, but no effect on the propensity to use credit.

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Definitions:

Subscription Price

The price at which existing shareholders can purchase additional shares in a rights offering.

Subscription Price

The price at which existing shareholders can purchase new shares of a company before the shares are offered to the public.

Rights Offering

A financial mechanism wherein a company offers its existing shareholders the opportunity to buy additional shares directly from the company at a discounted price, before the company offers it to the general public.

Stock Price

The cost of purchasing a share of ownership in a company, fluctuating based on supply and demand in the stock market.