4. Your pal, Fred Flinderbinder, came into class this morning grinning from ear to ear. It seems a stock in which he advised his parents to invest is doing fabulously well. Fred said the firm usually pays a dividend of $2 a share, which is about 4% of its recent $50 market price. Yesterday, however, his folks got a letter that said the cash dividend was being passed, but instead the firm was issuing a stock dividend of 1 share for every 10 owned. Fred calculates that’s worth the equivalent of $5 a share, two and a half times the normal cash dividend! Fred has told you all this knowing you’re taking finance. He’s asked you what you think, obviously expecting praise and approval. What would you say to Fred?