Wyatt Oil Pays a Regular Dividend of $2

question 96

Multiple Choice

Wyatt Oil pays a regular dividend of $2.50 per share.Typically,the stock price drops by $2.00 per share when the stock goes ex-dividend.Suppose the capital gains tax rate is 20%,but investors pay different tax rates on dividends.Absent transactions cost,the highest dividend tax rate of an investor who could gain from trading to capture the dividend is closest to:

• A)0%.
• B)20%.
• C)24%.
• D)36%.