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Share repurchases are often more tax-efficient than declaring dividends because   Question 8 options:   a)  companies can reduce their taxable income by reducing the number of shares outstanding   b)  only shareholders who sell their stock are taxed on any resulting capital gain   c)  the ordinary income tax rate on buybacks is often lower than the long-term capital gains tax rate on dividends   d)  B and C are correct   e)  None of the options are correct

Share repurchases are often more tax-efficient than declaring dividends because   Question 8 options:   a)  companies can reduce their taxable income by reducing the number of shares outstanding   b)  only shareholders who sell their stock are taxed on any resulting capital gain   c)  the ordinary income tax rate on buybacks is often lower than the long-term capital gains tax rate on dividends   d)  B and C are correct   e)  None of the options are correct

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Share repurchases are often more tax-efficient than declaring dividends because

 

Question 8 options:

 

a) 

companies can reduce their taxable income by reducing the number of shares outstanding
 

b) 

only shareholders who sell their stock are taxed on any resulting capital gain
 

c) 

the ordinary income tax rate on buybacks is often lower than the long-term capital gains tax rate on dividends
 

d) 

B and C are correct
 

e) 

None of the options are correct
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