Multiple Choice
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.
Correct Answer:
Verified
Correct Answer:
Verified
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