Which One of the Following Statements Is Correct About a Corporation

question 34

Multiple Choice

Which one 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 preferred stock should be selected because its after-tax yield is 0.17% higher.
• B) The preferred stock should be selected because its after-tax yield is 0.80% higher.
• C) The bond should be selected because its after-tax yield is 0.17% lower.
• D)The bond should be selected because its after-tax yield is 1.3% higher.

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Definitions:

Heider

Refers to Fritz Heider, an Austrian psychologist known for his contributions to attribution theory and balance theory within social psychology.

Balanced State

A condition of mental or emotional stability where stresses and forces are well managed or in equilibrium.

Attraction

A force that draws people together, often based on physical appearance, similarity, or personality traits.

Group Therapist

is a mental health professional specialized in facilitating therapeutic sessions for groups, aiming to address and treat psychological issues collectively.