Which of the Following Is Not a Consequence of the Double

question 150

Multiple Choice

Which of the following is not a consequence of the double tax on dividends?

• A) Corporations have an incentive to retain earnings and structure distributions to avoid dividend treatment.
• B) Corporations have an incentive to invest in noncorporate rather than corporate businesses.
• C) The cost of capital for corporate investments is increased.
• D) Corporations have an incentive to finance operations with debt rather than equity.
• E) All of the above are consequences of the double tax on dividends.

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Definitions:

Reduce

To make something smaller or less in amount, degree, or size.

Affective Commitment

An employee's emotional attachment to, identification with, and involvement in a particular organization.

Performance

The manner in which an individual or group executes or accomplishes tasks, objectives, or duties.

Progression of Withdrawal

The theory describing stages through which an employee goes leading up to resignation, starting from minimal engagement to complete disengagement.