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:

Mind

The set of cognitive faculties including consciousness, perception, thinking, judgement, and memory; it is the mental counterpart to the physical body.

Body

The physical structure of a person or an organism, encompassing all its biological systems and parts.

Interact

To act in such a way as to have an effect on another; to act reciprocally or influence each other.

Egocentric Predicament

The problem that seems to follow from the view that we know only our own minds directly—that is, that we might never know anything or anyone else.