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 percent interest and a stock with no growth potential that pays an 8 percent dividend yield. Assume that the tax rate on dividends is 15 percent. What is Jose's marginal tax rate?

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