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.

---

Definitions:

General Level

A term that might refer to the overall state or condition of something, but not a specific financial term.

Prices For Goods

The amount of money required to purchase products, which can fluctuate based on factors like supply, demand, and inflation.

Interest Rates

The amount charged by a lender to a borrower for the use of assets, usually expressed as a percentage of the principal.

Investment Expenditures

The outlays made by firms, government, or individuals to purchase goods and services that can create future benefits.