Assume That Keisha's Marginal Tax Rate Is 37 Percent and Her

Multiple Choice

Assume that Keisha's marginal tax rate is 37 percent and her tax rate on dividends is 20 percent. If a city of Atlanta bond pays 6.56 percent interest, what dividend yield would a dividend-paying stock (with no growth potential) have to offer for Keisha to be indifferent between the two investments from a cash-flow perspective?

A) 20.00 percent
B) 9) 20 percent
C) 8) 20 percent
D) 6) 56 percent
E) None of the choices are correct.