Which of the Following Statements Is FALSE

question 7

Multiple Choice

Which of the following statements is FALSE?

• A)Tax rates vary by income,by jurisdiction,and by whether the stock is held in a retirement account.Because of these differences,firms may attract different groups of investors depending on their dividend policy.
• B)While many investors have a tax preference for share repurchases rather than dividends,the strength of that preference depends on the difference between the dividend tax rate and the capital gains tax rate that they face.
• C)Long-term investors are more heavily taxed on capital gains,so they would prefer dividend payments to share repurchases.
• D)One-year investors,pension funds,and other non-taxed investors have no tax preference for share repurchases over dividends,they would prefer a payout policy that most closely matches their cash needs.