Investing in Non-Dividend-Paying Stock That Is Expected Toappreciate Yearly by 5

question 10

Multiple Choice

Investing in non-dividend-paying stock that is expected toappreciate yearly by 5 percent instead of investing in 5 percent corporate bonds is an example of tax planning by:

• A)spreading income through portfoliodiversification
• B)avoiding income recognition
• C)changing the timing of recognition of taxable income
• D)changing the character of income

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Definitions:

Door-In-The-Face Technique

Influence technique based on reciprocity, in which one starts with an inflated request and then retreats to a smaller request that appears to be a concession.

Labeling Technique

Influence technique based on consistency, in which one assigns a label to an individual and then requests a favor that is consistent with the label.

Self-Fulfilling Prophecy

A forecast that, either directly or indirectly, ensures its own accuracy through a positive loop between what is believed and how one acts.

Foot-In-The-Door Technique

Influence technique based on commitment, in which one starts with a small request in order to gain eventual compliance with a larger request.