Maurice Is Currently Considering Investing in a High Dividend Yield

question 73

Essay

Maurice is currently considering investing in a high dividend yield stock with no growth potential that pays a 6% dividend yield or bonds issued by The Coca Cola Company that pay 8%.If Maurice's ordinary tax rate is 25% and his dividend tax rate is 15%,which investment should he choose? Which investment should he choose if his ordinary tax rate is 30%? At what ordinary tax rate would he be indifferent to the stock or to the bond? What strategy is this decision based upon?

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Definitions:

Express

pertains to conveying thoughts, feelings, or instructions clearly and directly, often through verbal or non-verbal communication.

Personality

The combination of characteristics or qualities that form an individual's distinctive character, affecting how they think, feel, and behave across various situations.

Situationist

Pertaining to the theory that environmental and situational contexts significantly influence behavior, as opposed to traits being solely responsible.

Correlation

A statistical measure that indicates the extent to which two variables fluctuate together, without implying causation.