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Use the Following Information to Answer the Question(s) Below

Question 56

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Use the following information to answer the question(s) below.
Suppose that all capital gains are taxed at a 20% rate, and that the dividend tax rate is 40%. Rearden Metal is currently trading for $40 per share, and is about to pay a $5 special dividend.
-Which of the following equations is INCORRECT?


A) Pcum - Pex = Div × Use the following information to answer the question(s) below. Suppose that all capital gains are taxed at a 20% rate, and that the dividend tax rate is 40%. Rearden Metal is currently trading for $40 per share, and is about to pay a $5 special dividend. -Which of the following equations is INCORRECT? A) P<sub>cum</sub> - P<sub>ex </sub>= Div × B) P<sub>cum</sub> - P<sub>ex</sub><sub> </sub>= Div × C) = D) (P<sub>cum</sub> - P<sub>ex</sub>) (1 - τ<sub>d</sub>) = Div(1 - τ<sub>g</sub>)
B) Pcum - Pex = Div × Use the following information to answer the question(s) below. Suppose that all capital gains are taxed at a 20% rate, and that the dividend tax rate is 40%. Rearden Metal is currently trading for $40 per share, and is about to pay a $5 special dividend. -Which of the following equations is INCORRECT? A) P<sub>cum</sub> - P<sub>ex </sub>= Div × B) P<sub>cum</sub> - P<sub>ex</sub><sub> </sub>= Div × C) = D) (P<sub>cum</sub> - P<sub>ex</sub>) (1 - τ<sub>d</sub>) = Div(1 - τ<sub>g</sub>)
C) Use the following information to answer the question(s) below. Suppose that all capital gains are taxed at a 20% rate, and that the dividend tax rate is 40%. Rearden Metal is currently trading for $40 per share, and is about to pay a $5 special dividend. -Which of the following equations is INCORRECT? A) P<sub>cum</sub> - P<sub>ex </sub>= Div × B) P<sub>cum</sub> - P<sub>ex</sub><sub> </sub>= Div × C) = D) (P<sub>cum</sub> - P<sub>ex</sub>) (1 - τ<sub>d</sub>) = Div(1 - τ<sub>g</sub>) =
Use the following information to answer the question(s) below. Suppose that all capital gains are taxed at a 20% rate, and that the dividend tax rate is 40%. Rearden Metal is currently trading for $40 per share, and is about to pay a $5 special dividend. -Which of the following equations is INCORRECT? A) P<sub>cum</sub> - P<sub>ex </sub>= Div × B) P<sub>cum</sub> - P<sub>ex</sub><sub> </sub>= Div × C) = D) (P<sub>cum</sub> - P<sub>ex</sub>) (1 - τ<sub>d</sub>) = Div(1 - τ<sub>g</sub>)
D) (Pcum - Pex) (1 - τd) = Div(1 - τg)

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