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.

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Definitions:

Expectancy Theory

A motivation theory suggesting that individuals are motivated to act in certain ways based on their expectations of outcomes and their valuations of those outcomes.

Valence

Is the value a person assigns to work‐related outcomes.

Work-Related Outcomes

The results or consequences stemming from employment, such as job satisfaction, productivity, and turnover.

Value Assigned

The process of determining the worth or importance assigned to an item, service, or process, often taking into account factors like cost, utility, and scarcity.