Assume That Jose Is Indifferent Between Investing in a Corporate

question 13

Multiple Choice

Assume that Jose is indifferent between investing in a corporate bond that pays 10% interest and a stock with no growth potential that pays an 8% dividend yield. Assume that the tax rate on dividends is 15%. What is Jose's marginal tax rate?

• A) 47%
• B) 37%
• C) 32%
• D) 15%
• E) None of these