Assume That Juanita Is Indifferent Between Investing in a Corporate

question 126

Multiple Choice

Assume that Juanita is indifferent between investing in a corporate bond that pays 10.20 percent interest and a stock with no growth potential that pays a 6 percent dividend yield. Assume that the tax rate on dividends is 15 percent. What is Juanita's marginal tax rate?

• A)50 percent
• B)40 percent
• C)30 percent
• D)15 percent
• E)None of the choices are correct.

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