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:

Advocacy Advertising

Advertising that is primarily focused on influencing public opinion or promoting policy changes rather than directly selling a product or service.

Indirect Lobbying

The act of influencing public decision-making through methods other than direct contact with legislators or officials, often involving public campaigns or mobilizing interest groups.

Arbitrator

An independent third party who is appointed to settle disputes or conflicts between parties, making a decision that is usually binding.

Mediator

A neutral third party who assists in resolving a dispute or conflict through dialogue and negotiation without taking sides.