# Ex-dividend stock price

Hello, I would like to know if it is possible to know exactly the effect of the dividend payment on a stock… For example, for a tax rate on dividends of 50% and a capital gain tax rate of 0% :

If the market anticipates that all the earnings will be paid out as dividends, then the price of the stock should be quoted as an “after-tax on dividend stock price”. (you accept to buy \$1 for a stock that gives you a \$2 dividends * (1 - 0.50) = \$1 net after tax gain dividends

If the market anticipates that no earning will be paid out, then the price of the stock should be quoted as an “after-tax on capital gain stock price”. (you buy \$1 for a stock that gives you a \$1 earnings * (1 - 0) = \$1 net after tax gain on capital Am i correct ? Is the clientele effect formula in CFAII is good to measure the good change in price ? i really believe it is not very accurate. Thank you…

I’m unfamiliar with a “clientele effect formula”.

Regarding the change in price post-dividend, use this formula:

Pw−Px=D* [(1−TD)/(1-TCG)]

If all the earnings are retained I would venture that price change of the stock is a function of it’s P/E ratio, but I don’t specifically recall that from the reading.