Which of the Following Statements Is CORRECT

question 74

Multiple Choice

Which of the following statements is CORRECT?

• A) the maximum federal tax rate on personal income in 2014 was 50%.
• B) since companies can deduct dividends paid but not interest paid, our tax system favors the use of equity financing over debt financing, and this causes companies' debt ratios to be lower than they would be if interest and dividends were both deductible.
• C) interest paid to an individual is counted as income for tax purposes and taxed at the individual's regular tax rate, which in 2014 could go up to 35%, but dividends received were taxed at a maximum rate of 15%.
• D) the maximum federal tax rate on corporate income in 2014 was 50%.
• E) corporations obtain capital for use in their operations by borrowing and by raising equity capital, either by selling new common stock or by retaining earnings. the cost of debt capital is the interest paid on the debt, and the cost of the equity is the dividends paid on the stock. both of these costs are deductible from income when calculating income for tax purposes.

Understand the system of checks and balances designed to prevent abuses of power.

Identify the principles underlying procedural and substantive due process, including the equal protection clause.

Recognize the limitations and protections provided by the free exercise and establishment clauses regarding religion.

Understand the concept of a firm's product offering to its target market.

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Definitions:

Reinforce

To strengthen or support, often with additional material or information, making something more effective or durable.

Basketball

A team sport in which two teams, most commonly of five players each, opposing one another on a rectangular court, compete with the primary objective of shooting a basketball through the defender's hoop.

Rat

A small rodent, often used in scientific research, that can be either a wild pest or a domesticated pet.

Punishment

A consequence applied with the intention of reducing or eliminating an unwanted behavior by causing discomfort or taking away a desired stimulus.