Which of the Following Statements Is FALSE

question 10

Multiple Choice

Which of the following statements is FALSE?

• A)When a firm pays a dividend,shareholders are taxed according to the dividend tax rate.If the firm repurchases shares instead,and shareholders sell shares to create a homemade dividend,the homemade dividend will be taxed according to the capital gains tax rate.
• B)When the tax rate on dividends exceeds the tax rate on capital gains,shareholders will pay lower taxes if a firm uses share repurchases for all payouts rather than dividends.
• C)Firms that use dividends will have to pay a lower after-tax return to offer their investors the same pre-tax return as firms that use share repurchases.
• D)The optimal dividend policy when the dividend tax rate exceeds the capital gain tax rate is to pay no dividends at all.

---

Definitions:

Risky

Characterized by or involving exposure to the possibility of financial loss or other adverse outcomes.

Racial Classification

The categorization of individuals based on perceived or attributed racial characteristics, often used for demographic, societal, or legal purposes.

Susie Phipps

A woman who challenged Louisiana's classification of her race based on an archaic law, highlighting issues of racial identity and legal classification in the United States.

White Privilege

Unearned advantages and societal benefits given to white individuals based on racial bias.