Which of the following statements is correct about a U.S.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.

Question

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The Answer of Which of the following statements is correct about a U.S.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.

Which of the Following Statements Is Correct About a U