Suppose that a country has a tax rate on dividends (T P ) of 40%. It has
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Question:
Suppose that a country has a tax rate on dividends (TP) of 40%. It has a tax rate on capital gains (TG) of 20%.
If these taxes affect the stock price on the ex-dividend date, what should happen to the stock price on the
ex-dividend date if a corporation pays a dividend per share of $5
a) A $10 decrease in the stock price.
b) A $3.75 decrease in the stock price.
c) A $3 decrease in the stock price.
d) A $2 decrease in the stock price.
Related Book For
Taxes And Business Strategy A Planning Approach
ISBN: 9780132752671
5th Edition
Authors: Myron Scholes, Mark Wolfson, Merle Erickson, Michelle Hanlon
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