A Corporation in a 34% Tax Bracket Invests in the Preferred

question 17

Multiple Choice

A corporation in a 34% tax bracket invests in the preferred stock of another company and earns a 6% pre-tax rate of return.An individual investor in a 15% tax bracket invests in the same preferred stock and earns the same pre-tax return.The after tax return to the corporation is _______ and the after tax return to the individual investor is _______.

• A) 3.96%; 5.1%
• B) 5.39%; 5.1%
• C) 6.00%; 6.00%
• D) 3.96%; 6.00%

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Definitions:

Regulatory Power

The authority held by a body or an institution to guide, direct, or control activities within certain fields according to laws or rules.

Minimum Labor Standards

The baseline requirements set by legislation that determine minimum wage, working hours, safety, and other working conditions.

Productivity

The efficiency at which individuals, companies, or economies produce goods or services, often measured as output per unit of input.

Workers' Compensation Rates

The cost charged to employers for workers' compensation insurance, varying based on job risk levels and company safety records.