Emily is in the 35% marginal tax bracket.She can purchase a York County school bond yielding 3.5% interest, which is not subject to a 5% state tax.But she is interested

Emily is in the 35% marginal tax bracket.She can purchase a York County school bond yielding 3.5% interest, which is not subject to a 5% state tax.But she is interested in earning a higher return for comparable risk.Which of the following is correct:
A)If she buys a corporate bond that pays 6% interest, her after-tax rate of return will be less than if she had purchased the York County school bond.
B)If she buys a U.S.government bond paying 5%, her after-tax rate of return will be less than if she had purchased the York County school bond.
C)If she buys a common stock paying a 4% dividend, her after-tax rate of return will be higher than if she had purchased the York County school bond.
D)All of these are correct.
E)None of these is correct.

Leave a Reply

Your email address will not be published.