SIE Exam Question 694: Answer and Explanation

Question: 694

Kappa Inc., a C Corp, had a profitable year and has extra money to invest. The owners would like to maximize the after-tax income to the corporation. Which of the following investments would best help them achieve their goal?

• A. Value stocks
• B. Preferred stock
• C. Municipal bonds
• D. Highly-rated corporate bonds

Correct Answer: B

Explanation:

Corporate investors in preferred stock can generally deduct 70% of the dividends they receive.