Formaggio Vecchio has just announced its regular quarterly cash dividend of $1 per share.

(a) When will the stock price fall to reflect this dividend payment—on the record date, the ex-dividend date, or the payment date?

(b) Assume that there are no taxes. By how much is the stock price likely to fall?

(c) Now assume that all investors pay tax of 30 percent on dividends and nothing on capital gains. What is the likely fall in the stock price?

(d) Suppose, finally, that everything is the same as in part (c), except that security dealers pay tax on both dividends and capital gains. How would you expect your answer to (c) to change? Explain.