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

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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-capture theory might account for this behavior.

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Corporate Finance

ISBN: 9780137845071

6th Edition

Authors: Jonathan Berk, Peter DeMarzo

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