1. Suppose that the government passed an unusual tax law last year stating that dividends will now be taxed at 10 percent and capital gains will be now taxed at 40 percent. You currently own a stock that will pay a special dividend tomorrow, and you wonder how this new tax law will affect the price for this stock on the ex-dividend date. Assume that the cumulative-dividend price of this stock equals $150 per share, and that the upcoming special dividend equals $15 per share. What do you expect the stock price will be on the ex-dividend date?

2. Your tortilla company would like to partially protect itself against upward movements in corn prices by utilizing call options. Your company buys a call option with strike price $600 for $15 and sells a call option with strike price $ 650 for \$7.75 . Both call options have one year until expiration . One year passes and the price of corn is $670. What is the profit from your options position?

3. Goldcorp is a firm that currently has $100M in debt and $100M in equity. Suppose the CEO announces that he will issue equity to fund the acquisition of a company that has a higher asset beta than the current asset beta of Goldcorp. The beta of Goldcorp equity will decrease as a result of this announcement . Is the previous sentence true , false, or uncertain?