Assume That Shavonne's Marginal Tax Rate Is 37 Percent and Her

question 118

Multiple Choice

Assume that Shavonne's marginal tax rate is 37 percent and her tax rate on dividends is 15 percent. If a corporate bond pays 6.2 percent interest, what dividend yield would a dividend-paying stock (with no growth potential) have to offer for Shavonne to be indifferent between the two investments from a cash-flow perspective?

• A)3)47 percent
• B)4)60 percent
• C)6)20 percent
• D)15.00 percent
• E)None of the choices are correct.

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