Which of the Following Statements Is False

question 23

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.

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Definitions:

Evaluation Trail

The systematic assessment of the path and outcomes of reasoning, decision-making, or the implementation of an intervention, often for accountability purposes.

Program Evaluation

The systematic method for collecting, analyzing, and using information to answer questions about projects, policies, and programs, particularly about their effectiveness and efficiency.

Evaluation Methods

Techniques and procedures used to systematically assess the design, implementation, and outcomes of programs and interventions.

Statistical Analysis

The process of collecting, examining, interpreting, and presenting numerical data to discover underlying patterns and relationships.