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Sarah just bought 100 shares of Hewlett Packard for $20 per share. Soon after, HP announced a $2 special dividend. If Sarah sells for $18
Sarah just bought 100 shares of Hewlett Packard for $20 per share. Soon after, HP announced a $2 special dividend. If Sarah sells for $18 on the ex-dividend day, then what is her after-tax change in wealth? Assume that nothing else happens to change the stock price (other than the dividend), that her tax rate on capital gains is 15%, and her tax rate on dividends is also 15%. Assume that she has other capital gains against which she can use a capital loss.
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