Emily is in the 35% marginal tax bracket.She can purchase a York County school bond yielding 5% interest, but she is interested in earning a higher return for comparable risk.
A) If she buys a corporate bond that pays 8% interest, her after-tax rate of return will be greater than if she purchased the York County school bond.
B) If she buys a U.S.government bond paying 6%, her after-tax rate of return will be less than if she purchased the York County school bond.
C) If she buys a common stock paying 6% dividend, her after-tax rate of return will be higher than if she purchased the York County school bond.
D) All of the above are correct.
E) None of the above are correct.
Correct Answer:
Verified
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