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  3. which of the following statements is false? o a. o

Which of the following statements is FALSE? O A. O B. Individuals in the highest...

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Finance

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Which of the following statements is FALSE? O A. O B. Individuals in the highest tax brackets have a preference for stocks that pay high dividends, 3. To compare investor preferences, we must quantify the combined effects of dividend and capital gains taxes to determine an effective dividend tax rate for an investor whereas tax-free investors and corporations have a preference for stocks with no or low dividends. O C. Differences in tax preferences create clientele effects, in which the dividend policy of a firm is O D. The dividend- capture theory states that absent transaction costs, investors can trade shares optimized for the tax preference of its investor clientele. at the time of the dividend so that non-taxed investors receive the dividend. 4. Use the information for the question(s) below Consider the following tax rates: OrdinaryDividend CorporateCapital Tax Rate Income Rate 40% 39% 35% Gains Rate Year 1997-2000 35% 2001-2002 35% 2003 20% 20% 15% Rate 40% 39% 15% 35% The effective tax disadvantage for retaining cash in 2000 is closest to: A. 14.75% B. 35.00% C. 15.00% OD. 13.35%

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