Question

The Omega Corporation has some excess cash it would like to invest in marketable securities for a long-term hold. Its vice-president of finance is considering three investments (Omega Corporation is in a 35 percent tax bracket and the tax rate on dividends is 20 percent). Which one should she select based on after-tax return:
(a) Treasury bonds at a 10 percent yield;
(b) Corporate bonds at a 13 percent yield;
(c) Preferred stock at an 11 percent yield?



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  • CreatedOctober 14, 2014
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