Dividends, issued by Corporations are: Taxed at the individual but not the Corpo
ID: 2721638 • Letter: D
Question
Dividends, issued by Corporations are: Taxed at the individual but not the Corporate Level Taxed at the Corporate but not the individual Taxed at the Corporate but not the individual Level Not Taxed at the Corporate but rather the individual Level Not Taxed at the individual but rather the Corporate Level If ABC company has annual EPS of $1.24 and has a P/E of 19.7x. What is my implied share price? $19.70 $1.24 $34.43 $24.43 $244.28 You are investing in a bond. Your primary goal is to have the best rated and most secured bond as possible. What rating would you likely seek? BBB CCC A AA AAA If an investor earns a 9% return and the inflation rate is S% what must be the approximate nominal rate? 1% 9% 8% 17% 0%Explanation / Answer
1. b - Taxed both at corporate and individual level
Dividend is paid to shareholder from the after tax income of the company. It means the corporate has already paid the tax on dividend. Also when the shareholder receives the dividend, he also pays the tax on it because it is considered as his person dividend income. So, double taxation is done on dividend.
2. d
Share Price = EPS*PE ratio = 1.24*19.7 $ =24.43 $
3. e. AAA
AAA bonds are best rated and most secured ones.
4. d
Nominal rate = (1+interest rate)*(1+inflation rate)-1 = 1.09*1.08-1 = 17.72%