The Dividend Exclusion for Corporations Receiving Dividends from Another Corporation

question 40

Multiple Choice

The dividend exclusion for corporations receiving dividends from another corporation has resulted in ________.

• A) a lower cost of equity for the corporation paying the dividend
• B) a higher relative cost of bond-financing for the corporation paying the dividend
• C) stock investments being relatively less attractive, relative to bond investments made by one corporation in another corporation
• D) stock investments being relatively more attractive relative to bond investments made by one corporation in another corporation

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Definitions:

Domestic Currency

The legal tender or currency that is circulated for use and accepted for exchange within the domestic economy of a country.

Dollarization

The process of a country adopting the US dollar as its primary currency, either officially or unofficially, alongside or in place of its own national currency.

Foreign Currency

Money or currency used in a country other than one's own.

Physical Commodity

Tangible goods that can be traded, bought, or sold, such as oil, gold, or agricultural products.