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:

Sensitization

The process of becoming more receptive or sensitive to a stimulus after repeated exposure to it.

Distal Stimuli

Objects and events in the external world that provide sensory input, as opposed to the sensory signals (proximal stimuli) actually perceived by the senses.

Psychophysics

The branch of psychology that deals with the relationships between physical stimuli and sensory perceptions and responses.

Discriminated Stimuli

Stimuli in operant conditioning that signal when a particular response will lead to a certain outcome.