Stock price to drop on the ex-dividend day

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Question: LMN Corporation, a real estate corporation, is planning to pay a dividend of $0.50 per share. Most of the investors in LMN corporation are other corporations that pay 40% of their ordinary income and 28% of their capital gains as taxes. However, they are allowed to exempt 85% of the dividends they receive from taxes. If the shares are selling at $10 per share, how much would you expect the stock price to drop on the ex-dividend day?

Reference no: EM131690348

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