Which of the following statements is correct about a corporation in the 35% tax bracket that can invest either in a bond paying 8% interest or in the preferred stock of another corporation that pays a 6% dividend? a. The stock is preferred by approximately .17%. b. The stock is preferred by approximately .80%. c. The bond is preferred by approximately 1.30%. d. The after-tax yields are identical on each.
Which of the following statements is correct about a corporation in the 35% tax bracket that can invest either in a bond paying 8% interest or in the preferred stock of another corporation that pays a 6% dividend? a. The stock is preferred by approximately .17%. b. The stock is preferred by approximately .80%. c. The bond is preferred by approximately 1.30%. d. The after-tax yields are identical on each.
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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Which of the following statements is correct about a corporation in the 35% tax bracket that can invest either in a bond paying 8% interest or in the
a. The stock is preferred by approximately .17%.
b. The stock is preferred by approximately .80%.
c. The bond is preferred by approximately 1.30%.
d. The after-tax yields are identical on each.
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