Assume That Jose Is Indifferent Between Investing in a Corporate

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) 37%.
B) 15%.
C) 32%.
D) 47%.
E) None of the choices are correct.