Assume That Keisha's Marginal Tax Rate Is 40% and Her

question 101

Multiple Choice

Assume that Keisha's marginal tax rate is 40% and her tax rate on dividends is 15%. If a city of Atlanta bond pays 7.65% interest, what dividend yield would a dividend-paying stock (with no growth potential) have to offer for Keisha to be indifferent between the two investments?

• A) 15%
• B) 10%
• C) 9%
• D) 7.65%
• E) None of these

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Definitions:

Formal Business Plans

Detailed documents that lay out the objectives, strategies, market analysis, and financial forecasts of a business, designed to guide operations and attract investment.

Scalable Business Model

A business model designed to allow growth and expansion without significant increases in costs or complexity.

Temporary Organization

A group or entity established with a specific end goal or time frame, ceasing to exist once its purpose has been fulfilled or the project is completed.

Serial Entrepreneurship

The practice of starting multiple businesses over time, often after the initial ventures have been established, sold, or ceased operation.