Suppose that all capital gains are taxed at a 25 rate, and that the dividend tax rate is 50 Arbuckle Corp is currently trading for $30, and is about to pay a $6 special dividend a Absent any other trading frictions or news, what will its share price be just after the dividend is paid Suppose Arbuck...

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Suppose that all capital gains are taxed at a 25% rate, and that the dividend tax rate

Question:

Suppose that all capital gains are taxed at a 25% rate, and that the tax rate is 50%. Arbuckle Corp. is currently trading for $30, and is about to pay a $6 special Absent any other trading frictions or news, what will its share price be just after the is paid? Suppose Arbuckle made a surprise announcement that it would do a share repurchase rather than pay a special What net tax savings per share for an investor would result from this decision?
c. What would happen to Arbuckle’s stock price upon the announcement of this change?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...