1

You buy a stock from the capital market. If the capital market is semi-strong efficient, which of the following statements is NOT correct?

a.

You cannot earn any abnormal returns above the required return by trading on public information.

b.

Fundamental analysis of publicly available information will not lead to abnormal returns.

c.

The stock is under-priced.

d.

Stock prices reflect all publicly available information.

e.

Past returns cannot be used to predict future stock returns.

2

A firm pays a fully franked cash dividend of $150 to one of its Australian shareholders who has a personal marginal tax rate of 20%. The corporate tax rate is 30%. What will be the shareholder's personal tax payable due to the dividend payment?

a.

64.2857

b.

-15

c.

42.8571

d.

30

e.

-21.4286