Question: The Omega Corporation has some excess cash that it would like to invest in marketable securities for a long-term hold. Its vice-president of finance is considering three investments (Omega Corporation is in a 35 percent tax bracket and the tax rate on dividends is 15 percent). Which one should she select based on aftertax return:
(a) Treasury bonds at a 9 percent yield;
(b) corporate bonds at a 12 percent yield; or
(c) preferred stock at a 10 percent yield?