9. A Company is financed only with equity and its shares are listed at a Price of $10 per share. This company announces that it will distribute a dividend of $1 per share. In a world in which there is only a tax dividend of 25% (and there are no other frictions), which of the following sentences is correct? b) a) The share price drops to $9 per share on the day of the dividend announcement. The price per share is equal to $9 per share after the ex_dividend date. c) The price per share drops to $9.75 per share on the ex_dividend date. d) None of the above.
9. A Company is financed only with equity and its shares are listed at a Price of $10 per share. This company announces that it will distribute a dividend of $1 per share. In a world in which there is only a tax dividend of 25% (and there are no other frictions), which of the following sentences is correct? b) a) The share price drops to $9 per share on the day of the dividend announcement. The price per share is equal to $9 per share after the ex_dividend date. c) The price per share drops to $9.75 per share on the ex_dividend date. d) None of the above.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Qd 242.
Transcribed Image Text:9. A Company is financed only with equity and its shares are listed at a Price of $10 per share.
This company announces that it will distribute a dividend of $1 per share. In a world in
which there is only a tax dividend of 25% (and there are no other frictions), which of the
following sentences is correct?
b)
a) The share price drops to $9 per share on the day of the dividend announcement.
The price per share is equal to $9 per share after the ex_dividend date.
c) The price per share drops to $9.75 per share on the ex_dividend date.
d) None of the above.
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