The ex-dividend price at which it brings the indifference among selling period and waiting period. Introduction: The date between the announcement date and payment date is the ex-dividend date. A stock that trades on the ex-dividend date is termed as stock on ex-dividend. A stock becomes ex-dividend when the person gets the payment of a dividend. When the ex-dividend date starts, the price ultimately falls down.

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Chapter 17, Problem 16P

a)

Summary Introduction

To determine: The ex-dividend price at which it brings the indifference among selling period and waiting period.

Introduction:

The date between the announcement date and payment date is the ex-dividend date. A stock that trades on the ex-dividend date is termed as stock on ex-dividend. A stock becomes ex-dividend when the person gets the payment of a dividend. When the ex-dividend date starts, the price ultimately falls down.

b)

Summary Introduction

To determine: The ex-dividend price that brings a difference when capital gain tax rate is 20% and dividend tax rate is 40%.

Introduction:

The date between the announcement date and payment date is the ex-dividend date. A stock that trades on the ex-dividend date is termed as stock on ex-dividend. A stock becomes ex-dividend when the person gets the payment of dividend. When the ex-dividend date starts, the price ultimately falls down.

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