Multiple Choice
Assume that Shavonne's marginal tax rate is 50% and her tax rate on dividends is 15%.If a corporate bond pays 10.20% interest,what dividend yield would a dividend-paying stock (with no growth potential) have to offer for Shavonne to be indifferent between the two investments from a cash-flow perspective?
A) 6.00%.
B) 7.00%.
C) 10.20%.
D) 15.00%.
E) None of the choices are correct.
Correct Answer:
Verified
Correct Answer:
Verified
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