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:

Recessive

A term used in genetics to describe a trait or gene that is only expressed when two copies of it are present, one from each parent, as it is masked by the presence of a dominant trait when only one copy is present.

Cell Differentiation

The process by which a cell becomes specialized in order to perform a specific function within the body.

Specialize

To focus on a particular area of study or profession, gaining extensive knowledge or skill in that area.

Teratogen

An agent or condition, including viruses, drugs, and chemicals, that can impair prenatal development and result in birth defects or even death.