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

question 18

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.
-Absent any other trading frictions or news,Rearden's share price just after the dividend is paid will be closest to:

• A)$35.
• B)$36.
• C)$37.
• D)$40.

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Definitions:

Pentagon Papers Case

A landmark legal case involving the publication of classified Department of Defense documents that revealed U.S. government secrets related to the Vietnam War.

No-Prior-Restraint Doctrine

A legal principle in constitutional law that prohibits the government from prohibiting speech or publication before the fact, mainly associated with media freedoms.

New York Times v. United States

A landmark Supreme Court case in 1971 that made it possible for the New York Times and Washington Post newspapers to publish the then-classified Pentagon Papers without risk of government censorship or punishment.

Free Exercise Clause

A clause within the First Amendment of the U.S. Constitution that ensures people have the freedom to observe their religious beliefs without hindrance from the government.