Which of the Following Statements Is False

question 63

Multiple Choice

Which of the following statements is false?

• A) Unlike taxes on capital gains or interest income, which are paid annually, taxes on dividends are paid only at the time the investor sells the stock.
• B) Deferring the payment of capital gains taxes lowers the present value of the taxes, which can be interpreted as a lower effective capital gains tax rate.
• C) Investors with longer holding periods or with accrued losses face a lower tax rate on equity income, decreasing the effective tax advantage of debt.
• D) Investors with accrued losses that they can use to offset gains face a zero effective capital gains tax rate.

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Definitions:

Investment Guidelines

Rules or criteria laid out by an investor or fund manager to guide the selection and management of investments.

Money Market Accounts

Financial accounts that typically offer higher interest rates compared to savings accounts, often used for short-term financial needs.

Concentrated Investments

Concentrated investments involve a portfolio that is heavily invested in a small number of assets, increasing risk due to lack of diversification.

Variable Annuity

A type of annuity plan that provides a retirement income, where the payments can vary depending on the performance of the investment options chosen by the annuitant.