A stock that you know is held by long term individual investors paid a large one time dividend You notice that the price drop on the ex dividend date is about the size of the dividend payment You find this relationship puzzling given the tax disadvantage of dividends Explain how the dividend captur...

Dividend capture theory states that investors with hig ...

A stock that you know is held by long-term individual investors paid a large one-time dividend. You

Question:

A stock that you know is held by long-term individual investors paid a large one-time You notice that the price drop on the ex-dividend date is about the size of the payment. You find this relationship puzzling given the tax disadvantage of dividends. Explain how the dividend-capture theory might account for this behavior?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...