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1. Buggy Whip Manufacturing Company is issuing preferred stock yielding 8%. Selten Corporation is considering buying the stock. Buggy's tax rate is 0% due to continuing heavy tax losses, and Selten's tax rate is 34%. What is the after-tax preferred yield for Selten?
A. 7.22%
B. 5.33%
C. 7.64%
D. 8.04%
2. A conversion feature allows:
A. the bondholder to redeem the bond before the maturity date.
B. the corporation to redeem the bond before the maturity date.
C. the bondholder to convert the bond to common stock.
D. the bondholder to demand increased collateral.
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