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

question 11

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 .73%.
• C) Stock A's after-tax return is higher by .27%.
• D)Stock B's after-tax return is higher by .58%.

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Definitions:

Energy Flow

Passage of energy in a one-way direction through an ecosystem.

Ecosystem

The interacting system that encompasses a community and its nonliving, physical environment. Compare with community.

Producers

Organisms, typically plants, that create their own food through photosynthesis, forming the base of the food chain.

Deductive Reasoning

The reasoning that operates from generalities to specifics and can make relationships among data more apparent. Compare with inductive reasoning. See hypothetico-deductive approach.