Question
A treasury manager is examining two possible investment alternatives for the firm s excess cash holdings. Investment X is a taxable money market security with
A treasury manager is examining two possible investment alternatives for the firm s excess cash holdings. Investment X is a taxable money market security with a yield of 4.2%. Investment Y is a muni with a yield of 1.5%. The firm's marginal tax rate is 35%. With these assumptions, which security should the treasury manager choose?
| a. | Investment Y | |
| b. | Incomplete information for making decision | |
| c. | Indifferent between Investment X and Investment Y | |
| d. | Investment X |
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Finance Applications And Theory
Authors: Marcia Cornett, Troy Adair, John Nofsinger
1st Edition
0073382256, 9780073382258
