Consider the following equation: P_cum - P_ex= Div × The term τ_g is

Question

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The term P_cum represents the price per share before a dividend is paid, and P_ex represents the price per share after a dividend is paid. Therefore, the difference between these two terms, which is being multiplied by Div to find the tax liability (11ea7db1_bd4a_f1bb_b9bd_6bf36ca534db_TB1619_11), is the amount of the dividend paid. The term τ_g therefore represents the tax rate on the capital gain on the sale of the shares after the dividend is paid, which is commonly referred to as the capital gains tax rate.

Consider the Following Equation: Pcum - Pex = Div ×

Consider the Following Equation: P_cum - P_ex= Div ×