Equity monitoring costs are lower in the United States than in other countries because:
A. debt that corporations use in the United States consists primarily of bank loans.
B. capital gains are not taxed in the United States unless they exceed some minimum amount.
C. U.S. companies must comply with fairly stringent financial audit requirements.
D. dividends in the United States are exempt from personal taxes; i.e., investors are not required to pay taxes on the dividends they receive.
E. banks in the United States hold a significant proportion of long-term bonds (debt) issued by companies, which means they can better monitor companies' debt than can banks in other countries.
Answer: C
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