Which Statement Is True Concerning the One-Year After-Tax Return on the Following

question 30

Multiple Choice

Which statement is true concerning the one-year after-tax return on the following stocks, assuming a 40% tax rate on dividends and a 20% tax rate on capital gains: Stock A is purchased for $50, offers a 5% dividend yield, and is sold for $56; Stock B is purchased for $60, offers no dividend yield, but is sold after one year for $70.

• A)Stock A's after-tax return is higher by 1.27%
• B)Stock B's after-tax return is higher by 0.73%
• C)Stock A's after-tax return is higher by 0.27%
• D)Stock B's after-tax return is higher by 0.58% After-tax Return_A =

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Definitions:

Self-aldol Condensation

A reaction where an aldehyde or ketone undergoes condensation with itself in the presence of a base to form a β-hydroxycarbonyl compound (an aldol) or a dehydrated version thereof.

Predict Outcome

The process of forecasting or determining the probable results or consequences of a chemical reaction or experiment.

Self-condensation

A reaction in which a molecule undergoes condensation with itself to form a larger molecule, often in the presence of a catalyst.

Ester

Organic compounds derived from an acid where at least one –OH (hydroxyl) group is replaced by an –O– (alkoxy) group.