Question
While you are studying at a university, you also work part-time at your brother's trading company. Your brother asks you to calculate the difference in
While you are studying at a university, you also work part-time at your brother's trading company. Your brother asks you to calculate the difference in the one-year after-tax returns on the following two stocks, assuming a 50% tax rate on dividends and a 30% tax rate on capital gains?" Stock A is purchased for $50, pays a $2.0 dividend at the end of the year, and is then sold for $56; stock B is purchased for $60, pays no dividend, but is sold after one year for $70. Which stock's after-tax return is higher?
Stock A's after-tax return is higher by 0.27%.
Stock A's after-tax return is higher by 1.27%.
Stock B's after-tax return is higher by 0.27%.
Stock B's after-tax return is higher by 1.27%.
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