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:

UN-Sponsored

Initiatives, programs, or activities endorsed or facilitated by the United Nations to address global issues.

Sustainability Activity

Actions undertaken by individuals or organizations aimed at maintaining or enhancing environmental, social, and economic well-being over the long term.

Utilitarian View

Considers ethical behaviour as that which delivers the greatest good to the greatest number of people.

Ethical Behaviour

The practice of conducting oneself according to accepted principles of right and wrong, especially within a professional context.