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Question regarding the dividend tax rate

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Reference no: EM131105398

You own a stock that will pay a dividend of $2.25. The stock currently sells for $21.61. You purchased this security 3 months ago for $19.90. If you sell this security on the ex-dividend date, tomorrow, what is your annualized after-tax return if you expect the stock price to drop by $1.17? Assume a capital gains tax of 15% and dividend tax rate of 32%.

A. 16.64%

B. 39.44%

C. 28.34%

D. 39.98%

E. 9.86%

Reference no: EM131105398

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