Question: Which statement is true concerning the one-year after-tax return on the following stocks, assuming a 30% tax rate on dividends and a 15% tax rate

Which statement is true concerning the one-year after-tax return on the following stocks, assuming a 30% tax rate on dividends and a 15% tax rate on capital gains: Stock A is purchased for $30, offers a 4.5% dividend yield, and is sold for $35; Stock B is purchased for $50, offers no dividend yield, but is sold after one year for $60.

Multiple Choice

a) Stock B's after-tax return is higher by 0.58%

b) Stock B's after-tax return is higher by 0.73%

c) Stock A's after-tax return is higher by 0.32%

d) Stock A's after-tax return is higher by 1.27%

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