Which of the Following Statements Is FALSE

question 50

Multiple Choice

Which of the following statements is FALSE?

• A)Unlike taxes on capital gains or interest income,which are paid annually,taxes on dividends are paid only at the time the investor sells the stock.
• B)Deferring the payment of capital gains taxes lowers the present value of the taxes,which can be interpreted as a lower effective capital gains tax rate.
• C)Investors with longer holding periods or with accrued losses face a lower tax rate on equity income,decreasing the effective tax advantage of debt.
• D)Investors with accrued losses that they can use to offset gains face a zero effective capital gains tax rate.

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Definitions:

Interest

The cost of borrowing money or the return on investment, calculated as a percentage of the principal sum.

Percent of Sales Method

A forecasting technique that estimates future financial statements based on a predicted sales growth rate and historical financial ratios.

Analysis of Receivables

The process of examining the accounts receivable of a business to assess their collectability and manage credit risk.

Accrued Interest

Interest that has been incurred but not yet paid in cash during a specific time period.