Which of the Following Statements Is FALSE

question 10

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:

Deviance

Behaviors or actions that violate social norms and expectations, often eliciting negative social reactions.

Chambliss

Refers to William J. Chambliss, a sociologist known for his work on the conflict theory and the sociology of law.

Vagrancy Laws

Legislation that criminalizes the act of wandering without a permanent home or means of support, often targeted at homeless individuals.

Law In Action

The practical application or enforcement of laws in real-life situations, as opposed to theoretical or written legal codes.