QC 15. Que Corporation pays a regular dividend of $1.00 per share. Typ- ically, the stock price drops by $0.83 per share when the stock goes ex- dividend. Suppose the capital gains tax rate is 17%, but investors pay dif- ferent tax rates on dividends. Absent transactions costs, what is the highest dividend tax rate of an investor who could gain from trading to capture the dividend? QC 16. On Monday, November 15, 2004, TheStreet.com reported: An experiment in the efficiency of financial markets will play out Monday fol- lowing the expiration of a $3.08 dividend privilege for holders of Microsoft." The story went on: The stock is currently trading ex-dividend both the spe- cial $3 payout and Microsoft's regular 8-cent quarterly dividend, meaning a buyer doesn't receive the money if he acquires the shares now. Microsoft stock ultimately opened for trade at $27.34 on the ex-dividend date (Novem- ber 15), down $2.63 from its previous close. Assuming that this price drop resulted only from the dividend payment (no other information affected the stock price that day), what is the implied effective dividend tax rate for Microsoft? QC 17. Natsam Corporation has $350 million of excess cash. The firm has no debt and 550 million shares outstanding with a current market price of $11 per share. Natsams board has decided to pay out this cash as a one-time dividend. a. What is the ex-dividend price of a share in a perfect capital market? b. If the board instead decided to use the cash to do a one-time share repur- chase, in a perfect capital market what is the price of the shares once the repurchase is complete? QC 18. The HNH Corporation will pay a constant dividend of $5.00 per share, per year, in perpetuity. Assume all investors pay a 15% tax on divi- dends and that there is no capital gains tax. Suppose the other investments with equivalent risk to HNH stock offer an after-tax return of 14%. a. What is the price of a share of HNH stock? b. Assume that management makes a surprise announcement that HNH will no longer pay dividends but will use the cash to repurchase stock instead. What is the price of a share of HNH stock now