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Assume that you are looking at company that operates in a market where investors pay a 40% tax rate on dividends and only 20% in
Assume that you are looking at company that operates in a market where investors pay a 40% tax rate on dividends and only 20% in capital gains. The companys stock trades at $20/share today and has an annual dividend of $1/share. If tomorrow is the ex-dividend day, what would you expect the stock price to be at the end of the day in theory?
a. $19/share
b. $19.25/share
c. $20/share
d. $21/share
e. none of the above
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