Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Chapter 2, Problem 32PS
Find the after-tax return lo a corporation that buys a share of
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Find the after-tax return to a corporation that buys a share of preferred stock at $40, sells it at year-end at $40, and receives a $4 year-end dividend. The firm is in the 30% tax bracket.
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Find the after-tax return to a corporation that buys a share of preferred stock at $40, sells it at year-end at $40, and receives a
$4 year-end dividend. The firm is in the 21% tax bracket. (Round your answer to 2 decimal places.)
After-tax rate of return
%
Find the after-tax return to a corporation that buys a share of preferred stock at $58, sells it at year-end at $58, and receives a $4 year-end dividend. The firm is in the 21% tax bracket. (Round your answer to 2 decimal places.)
Chapter 2 Solutions
Essentials Of Investments
Ch. 2 - Prob. 1PSCh. 2 - Why do most professionals consider the Wilshire...Ch. 2 - Prob. 3PSCh. 2 - What are the major components of the money market?...Ch. 2 - Describe alternative ways that an investor may add...Ch. 2 - Why are hightaxbracket investors more inclined to...Ch. 2 - Prob. 7PSCh. 2 - How does a municipal revenue bond differ from a...Ch. 2 - Prob. 9PSCh. 2 - 10. What is meant by limited liability? (LO 2-1)
Ch. 2 - Which of the following correctly describes a...Ch. 2 - Why are money market securities sometimes referred...Ch. 2 - A municipal bond carries a coupon rate of 4.25%...Ch. 2 - Suppose that short-term municipal bonds currently...Ch. 2 - An investor is in a 30% combined federal plus...Ch. 2 - Find the equivalent taxable yield of the municipal...Ch. 2 - Prob. 17PSCh. 2 - Prob. 18PSCh. 2 - Prob. 19PSCh. 2 - Using the data in the previous problem, calculate...Ch. 2 - Prob. 21PSCh. 2 - What would happen to the divisor of the Dow Jones...Ch. 2 - A T-hill with face value $10.000 and 87 days to...Ch. 2 - Prob. 24PSCh. 2 - Prob. 25PSCh. 2 - What options position is associated with: (LO 2-3)...Ch. 2 - Why do call options with exercise prices higher...Ch. 2 - Both a call and a put currently are traded on...Ch. 2 - Prob. 30PSCh. 2 - Examine the stocks listed in Figure 2.8. For what...Ch. 2 - Find the after-tax return lo a corporation that...Ch. 2 - Prob. 33CCh. 2 - Prob. 34CCh. 2 - Prob. 1CPCh. 2 - Go to the website for The Walt Disney Co (DIS) and...Ch. 2 - Prob. 2WM
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- Find the after-tax return to a corporation that buys a share of preferred stock at $42, sells it at year-end at $42, and receives a $5 year-end dividend. The firm is in the 30% tax bracket. (Do not round intermediate calculations. Round your answer to 2 decimal places.)arrow_forward8. What is the after-tax return to a corporation that buys a share of preferred stock at $45, sells it at year-end at $45, and receives a $5 year-end dividend? The firm is in the 20% tax bracket. Revenue = $5 For a company, taxable = $5 * 30% = $1.5 Tax = $1.5* 20% = $0.3 After tax income = $5 - $0.3= $4.7 Return $4.7/$45= 10.44%arrow_forwardRequired: Find the after-tax return to a corporation that buys a share of preferred stock at $40, sells it at year-end at $40, and receives a $4 year-end dividend. The firm is in the 21% tax bracket.arrow_forward
- A corporation buys a share of preferred stock at $40 and sells it at year-end at $40, andreceives a $4 year-end dividend. The firm is in the 30% tax bracket. What is the after-tax return to the corporation?arrow_forwardYou buy stock for $30 per share and sell it for $33 per share after holding it for slightly after a yer and collecting a $0.75 per share dividend. Youre ordinary income tax rate is 28% and your capital gains tax rate is 20%. Youre after tax return rate is? A. 8.00% B. 10.25% C. 12.5% D. 9.8% E.8.75%arrow_forwardOne year ago, you purchased stock ABC at price $10. During the year, the company paid $1 per share as taxable dividend. If you sell the stock at $13 today, what would be your realized after - tax return? Assume your marginal personal tax rate on income is 30% and the dividend tax credits of 12% can be applied. a. 29.65% b. 40% c. 33.7% d. 31.8%arrow_forward
- buy a stock for $41 per share and sell it for $59 after holding it for slightly over a vear and collecting a $4.7 per share dividend, If dividend income is taxed at a 25% rate and capital gains are taxed at 29%, what is your after-tax holding period return? (Write your answer in percentage and round it to 2 decimal places)arrow_forwardYou buy a stock for $47 per share and sell it for $50 after holding it for slightly over a year and collecting a $4 per share dividend. If dividend incone is taxed at a 20% rate and capital gains are taxed at 25%, what is your after tax holding period return? (Write your answer in percentage and round it to 2 decimal places)arrow_forwardThe current stock price of a company is $100 a share. This company announces a dividend of $5 a share. On ex-dividend day the stock price drops $4 to $96 a share. If the tax rate on dividends, D, is 30%, what is the implied tax rate on capital gains, G? You are a tax-exempt institution, and you plan to sell 100 shares (that you already own) of this stock; would you sell them cum- or ex-dividend?arrow_forward
- ↑ You are a shareholder in a C corporation. The corporation earns $2.05 per share before taxes. Once it has paid taxes it will distribute the rest of its earnings to you as a dividend Assume the corporate tax rate is 25% and the personal tax rate on all income is 20% How much is left for you after all taxes are paid? The amount that remains is $ per share. (Round to the nearest cent.)arrow_forwardSuppose a firm in the 40% federal-plus-state tax bracket needs to pay $1 in dividends to its shareholders. What is the pretax income it should have to pay this dividend? $1.00 $1.67arrow_forward22) You buy a stock for $30 per share and sell it for $33 after holding it for slightly over a year and collecting a $0.75 per share dividend. Your ordinary income tax rate is 28 percent and your capital gains tax rate is 20 percent. Your after-tax rate of return is to e asse (8 A) 12.50 percent. B) 9.80 percent. C) 8.75 percent. D) 8.00 percent. E) None of the above 22) riesarrow_forward
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