12)

A firm pays a fully franked cash dividend of $100 to one of its Australian shareholders who has a personal marginal tax rate of 40%. The corporate tax rate is 30%. What will be the shareholder's personal tax payable due to the dividend payment?

a.

10

b.

14.2857

c.

57.1429

d.

15

e.

21.4286

13)

A company conducts the following capital payout and raising policies. Assume that there are no taxes, no signalling effects and no transaction costs. Which one of the following statements is NOT correct?

a.

Cash dividend is one capital payout policy.

b.

3 for 2 stock split will increase the number of shares by 50% and decrease the share price by 33.33%.

c.

1 for 2 bonus issue will increase the number of shares by 50% and decrease the share price by 50%.

d.

10% stock buy-back will decrease the number of shares by 10%.

e.

1 for 5 rights issue at a subscription price of $1 when the pre-announcement stock price was $3, will increase the number of shares by 20% and decrease the share price by 11.11%.

15)

The below three graphs show probability density functions (PDF) of three different random variables Red, Green and Blue. Let P1 be the unknown price of a stock in one year. P1 is a random variable. Let P0=1, so the share price now is $1. This one dollar is a constant, it is not a variable.

Which of the below statements is NOT correct?

a.

Blue is a stock's future price (P1), with a minimum value of zero.

b.

Green is the log gross discrete return (LGDR).

c.

Red is log-normally distributed, and the mean is higher than the median.

d.

Green is normally distributed with the same mean and median.

e.

Red is a stock's gross discrete return (GDR), with a minimum value of negative one.