Assume That Juanita Is Indifferent Between Investing in a Corporate

question 59

Multiple Choice

Assume that Juanita is indifferent between investing in a corporate bond that pays 10.2% interest and a stock with no growth potential that pays a 6% dividend yield.Assume that the tax rate on dividends is 15%.What is Juanita's marginal tax rate?

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

Recognize the importance of the marginal productivity of resources in determining resource allocation and production costs.

Understand the relationship between economic profit and cost-minimization/profit-maximization in resource allocation.

Understand the principle of profit maximization and how it is affected by input costs and output levels.

Grasp the concept of cost-minimization for firms using multiple inputs.

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Definitions:

Stator

The stationary part of an electric machine, such as a motor or generator, that houses the coil windings and does not rotate.

RPM

Stands for revolutions per minute, a unit of rotational speed indicating the number of turns made by an object in one minute.

Torque

The turning force developed by a motor.

Horsepower

A unit of measurement for power, particularly for engines and motors, representing the power needed to lift 550 pounds by one foot in one second.