Following trading hours on April 25, 2017, Costco Wholesale Corporation (symbol: COST) announced that it would pay a special dividend of $7.00 per share in early May. The ex-dividend date for this special dividend was May 8, 2017. Thus, if you held COST stock at the beginning of May 8, 2017, you would have been paid the special dividend of $7 per share. Otherwise, you would have not received the special dividend. The purpose of this question is to examine the COST price reaction on the announcement date and ex-dividend date.

e) The top marginal tax rates in 2017 for dividends and capital gains are both 20 percent. Based on those numbers, what is the effective dividend tax rate? Why do you think this is different from your answer in part (d)? (This difference is most likely related to reasons other than taxes.)