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Individual investors, asset management firms and institutional investors are subject to 4 0 % , 1 0 % and 5 % taxation on dividends and
Individual investors, asset management firms and institutional investors are subject to and taxation on dividends and and on capital gains respectively. They all invest in growth stocks, neutral stocks and blue chips. Growth stocks are expected to pay dividends of USD and have capital gains of every year perpetually. The same forecasts for neutral stocks are and and for blue chips and The institutional investors are the marginal investors and can determine the price of the stocks. Every type of investor maximises their aftertax income.
i Suppose that institutional investors require a aftertax return. What are the prices of the growth, neutral, and bluechip stocks?
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