Show that an owner of P V Ltd in Example would not care whether P V Ltd paid any dividend at the end of year 1 Assume that the good economy state was realized in year 1 ...

The procedure here is similar to that used in Question 2 Assume that the good economy state is reali ...

Show that an owner of P. V. Ltd. in Example would not care whether P. V. Ltd.

Question:

Show that an owner of P. V. Ltd. in Example would not care whether P. V. Ltd. paid any at the end of year 1. Assume that the good- economy state was realized in year 1.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...