Consider the following equation: Pcum - Pex = Div × The term Pcum is:
A)the personal tax rate for capital gains.
B)the price per share after a dividend is paid.
C)the price per share before a dividend is paid.
D)the effective dividend tax rate.

Question

Consider the following equation: Pcum - Pex = Div ×  The term Pcum is:
A)the personal tax rate for capital gains. 
B)the price per share after a dividend is paid. 
C)the price per share before a dividend is paid. 
D)the effective dividend tax rate.

Quizplus · Accepted Answer

Pcum represents the price per share before a dividend is paid, as the equation is calculating the difference between Pcum and the price per share after a dividend is paid (Pex) and the resulting quantity is multiplied by the dividend amount (Div).

Consider the Following Equation: Pcum - Pex = Div ×