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ACG has 1 million common shares which are currently selling for $20 per share

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ACG has 1 million common shares which are currently selling for $20 per share. The company recently announced dividend payment of $1.50 per share. Assume that the average investor pays a personal marginal tax rate of 29% on dividend income. How do we expect the share price to behave on the ex-dividend date?

 

Multiple Choice:

a. The share price will decrease by about $1.065

b. The share price will increase by about $1.50.

c. The share price will decrease by about $1.50.

d. The share price will remain unchanged

e. The share price will increase by about $1.065.c