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

question 48

Multiple Choice

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.
-The effective dividend tax rate for an investor in Rearden Metal is closest to:

• A)0%.
• B)20%.
• C)25%.
• D)30%.

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Definitions:

U.S. Citizens

Individuals who either are born in the United States or have been naturalized, granting them rights and responsibilities under U.S. law.

Philippine War

A conflict from 1899 to 1902 where Filipino forces fought for independence from the United States after being ceded by Spain following the Spanish-American War.

White Man's Burden

A concept popularized by Rudyard Kipling's poem, suggesting the duty of European and Euro-American peoples to colonize and civilize non-European societies.

Anglo-Saxon Nations

Refers to countries with a dominant cultural heritage stemming from Anglo-Saxon traditions, often associated with English-speaking countries.