Two Days Before the Ex-Dividend Date, Drexel Corporation Buys 100

question 1

Multiple Choice

Two days before the ex-dividend date, Drexel Corporation buys 100 shares of Zebra Corporation stock (less than 1%) for $200,000. Drexel Corporation receives $10,000 of dividends from Zebra Corporation. Two weeks after the ex-dividend date, Drexel Corporation sells the Zebra Corporation stock for $190,000. Which of the following statements is correct?

• A)Drexel Corporation cannot recognize a capital loss.
• B)Drexel Corporation cannot take a dividends-received deduction on the Zebra Corporation dividend.
• C)Drexel Corporation will be allowed a 50% dividends-received deduction when reporting the Zebra Corporation dividend.
• D)Drexel Corporation will receive no dividends-received deduction because the stock was purchased ex-dividend.

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Definitions:

Lean Manufacturing

An organized approach to reducing waste in a production system without compromising efficiency.

Make to Stock

A production strategy where products are manufactured in anticipation of demand, based on forecasts, and stored in inventory.

Pull Manufacturing

A production strategy where work is only initiated as per demand, aiming to reduce inventory levels and increase efficiency.

Make to Order

is a manufacturing process in which production starts only after a customer's order is received.