Which of the Following Statements Is FALSE

question 33

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:

Clogged Arteries

A condition where fatty deposits, cholesterol, and other substances build up in the walls of arteries and restrict blood flow.

Deliberate Mind

The cognitive process of consciously and carefully considering decisions or actions.

Unwanted Thought

A distressing and involuntary thought, idea, or mental image that is difficult to suppress and often leads to significant anxiety or discomfort.

Suppress

To hold back or stop something from being expressed, revealed, or acted on.