Share Repurchases Have a Tax Advantage Over Dividends Because

question 86

Multiple Choice

Share repurchases have a tax advantage over dividends because

• A)dividend payments are tax deductible.
• B)the discount method may apply to tax only half of any capital gain made by long-term investors.
• C)repurchases are associated with increased customer loyalty.
• D)share repurchases increase the value of debt.

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Definitions:

Exchange Money

The act of giving one currency in return for another or for goods and services.

Postpurchase Behavior

Involves the actions and reactions of consumers after buying and using a product, affecting future purchase decisions.

Consumer Purchase Decision

The process by which a consumer decides whether or not to purchase an item after considering various factors and alternatives.

Financial Transaction

Any exchange or transfer of money or monetary value between parties.