If the short-term commercial paper rate is 6 percent and the corporate tax rate is 35 percent, what yield would a corporation require on an investment in auction-rate preferred stock? Assume the default risk is the same as for commercial paper.
A)6 percent
B)39 percent
C)9.2 percent
D)4.4 percent

Question

Quizplus · Accepted Answer

The Answer of If the short-term commercial paper rate is 6 percent and the corporate tax rate is 35 percent, what yield would a corporation require on an investment in auction-rate preferred stock? Assume the default risk is the same as for commercial paper.
A)6 percent
B)39 percent
C)9.2 percent
D)4.4 percent

If the Short-Term Commercial Paper Rate Is 6 Percent and the Corporate