Which of the following statements is FALSE?
A)Tax rates vary by income,by jurisdiction,and by whether the stock is held in a retirement account.Because of these differences,firms may attract different groups of investors depending on their dividend policy.
B)While many investors have a tax preference for share repurchases rather than dividends,the strength of that preference depends on the difference between the dividend tax rate and the capital gains tax rate that they face.
C)Long-term investors are more heavily taxed on capital gains,so they would prefer dividend payments to share repurchases.
D)One-year investors,pension funds,and other non-taxed investors have no tax preference for share repurchases over dividends,they would prefer a payout policy that most closely matches their cash needs.

Question

Quizplus · Accepted Answer

This statement is false. Long-term investors typically have lower tax rates on their capital gains compared to short-term investors. Therefore, they may prefer share repurchases over dividends, as it can lead to a higher capital gain when they sell their shares.

Which of the Following Statements Is FALSE