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What interest rate would a municipal bond have

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Question - Assume that Patrick's marginal tax rate is 30% and his tax rate on dividends is 15%. If a dividend-paying stock (with no growth potential) pays an 8% dividend yield, what interest rate would a municipal bond have to offer for Patrick to be indifferent between the two investments from a cash-flow perspective?

A) 30.00%.

B) 15.00%.

C) 8.00%.

D) 6.80%.

E) None of the choices are correct.

Reference no: EM133027791

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