Which of the Following Statements Is FALSE

question 39

Multiple Choice

Which of the following statements is FALSE?

• A)Unlike with capital structure,taxes are not an important market imperfection that influence a firm's decision to pay dividends or repurchase shares.
• B)If dividends are taxed at a higher rate than capital gains,which has been true until the most recent change to the tax code,shareholders will prefer share repurchases to dividends.
• C)Shareholders typically must pay taxes on the dividends they receive.They must also pay capital gains taxes when they sell their shares.
• D)Because long-term investors can defer the capital gains tax until they sell,there is still a tax advantage for share repurchases over dividends.

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Definitions:

Excise Tax

A tax imposed on specific goods, services, and activities, such as gasoline, tobacco, and alcohol, often used to discourage their use and generate revenue.

Personal Income Tax

Tax imposed on individuals based on their income, including wages, salaries, and investment income.

Trade Deficit

A condition in which a nation's expenditures on imported goods and services surpass its income from exports, leading to a trade deficit.

Trade Deficit

A situation that occurs when a country's imports of goods and services exceed its exports.