Which of the Following Statements Is False

question 67

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) But 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:

Compensation Policies

Guidelines and rules set by a company to determine how employees are compensated for their work, including wages, benefits, bonuses, and other incentives.

Cooperative Acceptance

When parties involved in a transaction or negotiation agree on terms and proceed cooperatively.

Fixed Point

A value that remains constant or unchanged in the context of a particular mathematical function or physical process.

Core Principles

Fundamental beliefs or values that form the foundation for a system, organization, or individual's actions and decisions.