Multiple Choice
Assume that Lavonia's marginal tax rate is 20%. If a city of Tampa bond pays 5% interest, what interest rate would a corporate bond have to offer for Lavonia to be indifferent between the two bonds?
A) 8%.
B) 7%.
C) 20%.
D) 4%.
E) None of the choices are correct.
Correct Answer:
Verified
Correct Answer:
Verified
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