Which of the Following Statements Is Correct About a Corporation

question 58

Multiple Choice

Which 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 stock is preferred by approximately .17%.
• B) The stock is preferred by approximately .80%.
• C) The bond is preferred by approximately 1.30%.
• D) The after-tax yields are identical on each.

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Definitions:

Postconventional

A stage of moral development in which an individual's moral reasoning is based on principles that transcend societal and personal norms.

Law

A system of rules created and enforced through social or governmental institutions to regulate behavior, with its precise definition a matter of longstanding debate.

Character Counts

A phrase emphasizing the importance of ethical conduct and integrity in personal and professional life.

Work Hard

The act of exerting significant effort and diligence in completing tasks or achieving goals.