< Back to Assignment Attempts: 3 Do No Harm: 3/5 11. The tax system Understanding taxes From a corporation's point of view, does the tax treatment of dividends and interest paid favor the use of debt financing or equity financing? Equity financing Debt financing You bought 1,000 shares of Tund Corp. stock for $77.25 per share and sold it for $75.00 per share within the same year. How will your gain or loss be treated when you file your taxes? As a capital loss deducted from current taxable income As a capital gain taxed at the current ordinary-income tax rate As a capital loss taxed at the long-term tax rate As a capital loss deducted from taxable income in the year that the loss is realized Suppose you want to invest $10,000. You have two options: (1) Invest in California municipal bonds with an expected rate of return of 10.00%, or (2) invest in J and K Corp.'s bonds with an expected rate of return of 18.50%. Assume that your decision is based on a tax perspective. If everything else is the same for both bonds, at what tax rate would you be indifferent between these two bonds? 41.36%