Laurie is thinking about investing in one or several of the following investment options:\n \n• Corporate bonds (ordinary interest paid annually)\n• Divi
Laurie is thinking about investing in one or several of the following investment options:
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• Corporate bonds (ordinary interest paid annually)
\r\n• Dividend-paying stock (qualified dividends)
\r\n• Life insurance (tax-exempt)
\r\n• Savings account
\r\n• Growth stock
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a) Assuming all of the options earn similar returns before taxes, rank Laurie’s investment options from highest to lowest according to their after-tax returns.
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b) Which of the investments employ the deferral and/or conversion tax planning strategies?
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c) How does the time period of the investment affect the returns from these alternatives?
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d) How do these alternative investments differ in terms of their nontax characteristics?
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