Answered: 13. A taxable security is yielding 4%.…

13. A taxable security is yielding 4%. If the company's marginal tax rate is 35%, then a tax-free bond would have to yield ____ % to be comparable. Group of answer choices 4% 4.38% 2.85% 2.6%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

13. A taxable security is yielding 4%. If the company's marginal tax rate is 35%, then a tax-free bond would have to yield ____ % to be comparable.

Group of answer choices

4.38%

2.85%

2.6%

14. Which of the following is NOT an optimal use for short-term excess cash?

Group of answer choices

put the cash in a highly liquid, interest bearing account

repurchase stock

Pay down credit lines

make overnight investments

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