20. Formaggio Vecchio announced its regular quarterly cash dividend of $0.20 per share. Currently there are one million shares outstanding.

Declaration date: October 24, 2006

Ex-dividend date: November 20, 2006

Record date: November 22, 2006

Payment date: December 15, 2006

1. On ____ will the stock price change to reflect the value of the dividend;

2. Formaggios stock price at the end of November is expected to be $20. The dividend yield is ____;

3. Suppose that the marginal tax rate on dividend is 15% and the marginal tax rate on capital gain is 10%, the stock price will fall by _____ after the ex-dividend date;

4. Suppose that the company decides to use the same amount of cash to buy back shares rather than to issue cash dividends. The company will buy back shares at the market price at the end of November. You currently hold 10000 shares, and you decide to sell 1000 shares during the repurchase. The percentage ownership after the repurchase is ____ ;

5. Suppose that the company decides to issue a 10% stock dividend instead of a cash dividend. The stock price will fall by ___ due to the dilution.