Fixed dividend preference shares are good candidates for marketable security holdings designed to provide liquidity because the dividends are excludable from taxable income, hence the preference would provide a relatively high after-tax rate of return.

Question

Quizplus · Accepted Answer

Fixed dividend preference shares are not excludable from taxable income; dividends are typically taxable, which affects the after-tax rate of return.

Fixed Dividend Preference Shares Are Good Candidates for Marketable Security