Answered: A firm in the 25 percent tax bracket is…

A firm in the 25 percent tax bracket is aware of a tax-exempt security that is paying a yield of 9.25 percent. To match this yield, taxable securities must offer a before-tax yield of

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter11: Notes, Bonds, And Leases

Section: Chapter Questions

Problem 6Q

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Concept explainers

Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.

Question

A firm in the 25 percent tax bracket is aware of a tax-exempt security that is paying a yield of 9.25 percent. To match this yield, taxable securities must offer a before-tax yield of

Group of answer choices

7.0 percent.

12.33 percent.

11.56 percent.

10.8 percent.

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