Assume That Lucas's Marginal Tax Rate Is 32 Percent and His

question 94

Multiple Choice

Assume that Lucas's marginal tax rate is 32 percent and his tax rate on dividends is 15 percent. If a dividend-paying stock (with no growth potential) pays an 8 percent dividend yield, what interest rate would a municipal bond have to offer for Lucas to be indifferent between the two investments from a cash-flow perspective?

• A)32.00 percent
• B)15.00 percent
• C)8)00 percent
• D)6)80 percent
• E)None of the choices are correct.

---

Definitions:

Promotions

Marketing activities that aim to increase visibility, sales, or the launch of new products through various strategies and media.

Purchase Decision

The final determination or choice made by a consumer to buy a product or service after considering various factors.

Informing

The act of providing useful or necessary information to people.

Marketing Mix

Blending the four elements of marketing strategy—product, distribution, promotion, and pricing—to fit the needs and preferences of a specific target market.