Peabody Mining Company’s common stock is selling for $60 the day before the stock goes ex-dividend. The annual dividend yield is 6.5 percent, and dividends are distributed quarterly. Ignore taxes.
a. Based solely on the impact of the cash dividend, by how much should the stock go down on the ex-dividend date? (Do not round intermediate calculations and round your answer to 2 decimal places.)
The stock would go down by
b. What will the new price of the stock be? (Do not round intermediate calculations and round your answer to 2 decimal places.)
New stock price