Which of the Following Statements Is FALSE

question 42

Multiple Choice

Which of the following statements is FALSE?

• A)Other benefits from deferral arise because the firm effectively gains a real option to repatriate income at times when repatriation might be cheaper.
• B)By pooling foreign income,the firm effectively pays the combined tax rate on all foreign income.
• C)In years in which the U.S.tax rate exceeds the combined tax rate on all foreign income,the repatriation of additional income does not incur an additional U.S.tax liability,so the earnings can be repatriated tax free.
• D)Deferring repatriation of earnings lowers the overall tax burden in much the same way as deferring capital gains lowers the tax burden imposed by the capital gains tax.

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Definitions:

Par Value

A nominal value assigned to a security, such as a share of stock, representing the minimum price at which the security can be issued.

Premium

An amount paid in addition to the standard or expected cost, often for insurance coverage or higher quality goods and services.

Convertible Bonds

Bonds that can be converted into a predetermined number of the issuing company's equity shares at certain times during the bond's life, usually at the discretion of the bondholder.

Specific Assets

Assets that are designated for a particular use or service within a business, often tailored to particular operational requirements.