Question
You are comparing the dividend policies of three dividend-paying firms in Australia (company tax rate is 30%). You have collected the following information on the
You are comparing the dividend policies of three dividend-paying firms in Australia (company tax rate is 30%). You have collected the following information on the ex-dividend behaviour of these firms.
|
| NE Gas | SE Gas | NW Electric |
| Cum-price | 50 | 70 | 100 |
| Ex-price | 47 | 67 | 95 |
| Fully franked Dividends/share | 3 | 3 | 5 |
- What are the associated franking credits for three companies at the given franked dividends? (1.5 marks)
- How much does the market value the associated franking credits (a.k.a. , keeping two digits, eg. 0.15)? (1.5 marks)
- If you were a tax-exempt Australian domestic investor, which company would you use to make dividend arbitrage profits? How would you go about doing so? (2 marks)
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Handbook For Surviving The Global Financial Crisis
Authors: Barbara Goldsmith
1st Edition
1514811995, 978-1514811993
