Which of the Following Statements Is False

question 34

Multiple Choice

Which of the following statements is false?

• A) Individuals in the highest tax brackets have a preference for stocks that pay high dividends, whereas tax-free investors and corporations have a preference for stocks with low or no dividends.
• B) To compare investor preferences, we must quantify the combined effects of dividend and capital gains taxes to determine an effective dividend tax rate for an investor.
• C) The dividend-capture theory states that absent transaction costs, investors can trade shares at the time of the dividend so that non-taxed investors receive the dividend.
• D) Differences in tax preferences create clientele effects, in which the dividend policy of a firm is optimized for the tax preference of its investor clientele.

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Definitions:

Operating Capacity

The maximum output a company can produce under normal conditions.

Sales Increase

An uptick in the volume or value of products or services sold by a business over a given period.

Variability

How much scores differ from one another or, put another way, the amount of spread or dispersion in a set of scores.

Within-group Differences

Variability or disparities found within a single group's members rather than between different groups.