Assume That Juanita Is Indifferent Between Investing in a Corporate

Multiple Choice

Assume that Juanita is indifferent between investing in a corporate bond that pays 10.20% interest and a stock with no growth potential that pays a 6% dividend yield. Assume that the tax rate on dividends is 15%. What is Juanita's marginal tax rate?

A) 50%.
B) 40%.
C) 30%.
D) 15%.
E) None of the choices are correct.