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7) Aaron owns 1,600 shares of LP Gas stock which he purchased six years ago at a price of S18 a share To these shares
7) Aaron owns 1,600 shares of LP Gas stock which he purchased six years ago at a price of S18 a share To these shares are selling for $26 each. Aaron is subject to a tax rate of 20 percent on both his dividend income and his capital gains. Ignore costs. From Aaron's point of view, a stock repurchase today: A) Is more desirable than a cash dividend in respect to taxes. B) Is more highly taxed than a cash dividend. C) Is totally unacceptable to him. D) Is equivalent to a cash dividend. E) Will result in the same tax liability as an equivalent cash dividend. 8) Kate purchased 500 shares of Fast Deliveries stock on Wednesday, July 7. Ted purchased 100 shares of Fast Deliveries stock on Thursday, July 8. Fast Deliveries declared a dividend on June 20 to shareholders of record on July 12 and payable on August 1. Which one of the following statements concerning the dividend paid on August 1 is correct given this information? A) Both Ted and Kate are entitled to one-half of the dividend amount. B) Both Ted and Kate are entitled to the dividend. C) Kate is entitled to the dividend but Ted is not. D) Neither Kate nor Ted is entitled to the dividend. E) Ted is entitled to the dividend but Kate is not
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