The Harsanyi Corp

question 79

Multiple Choice

The Harsanyi Corp. is considering four investments. Which provides the highest after-tax return for Harsanyi Corp. if it is in the 34% federal tax bracket? Assume the tax rate on dividends is 15%.

• A) Treasury bonds at 5.0%
• B) Corporate bonds at 8.0%
• C) Municipal bonds at 5.0%
• D) Preferred stock at 6.0%

---

Definitions:

Freedom Of Enterprise

The freedom of firms to obtain economic resources, to use those resources to produce products of the firms’ own choosing, and to sell their products in markets of their choice.

Individual Firms

Separate business entities that produce goods or provide services in an economy.

Laissez-Faire Capitalism

An economic system where private parties are free from government intervention in the production and distribution of goods and services, barring basic regulations.

Government Role

The range of activities undertaken by the government to regulate, supervise, and participate in the economy, including legislation, taxation, and public services.