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2 . You own shares of Cyberdyne Systems. This morning, those shares were trading for $ 6 0 per share. Lockheed Martin announces that they
You own shares of Cyberdyne Systems. This morning, those shares were trading for $ per share. Lockheed Martin announces that they plan to purchase Cyberdyne Systems by buying all outstanding shares of Cyberdyne Systems for $ one year from today. Additionally, Cyberdyne had previously announced a dividend to be paid one year from today for $ per share. The dividend will be paid before Lockheed Martin closes the deal. Assume that with certainty Lockheed Martin will purchase Cyberdyne.
a What is the expected dividend yield of Cyberdyne?
b What is the expected capital gain rate of Cyberdyne?
c What is the expected return of owning Cyberdyne stock over the next year?
d If the expected return of Cyberdyne did not change after the purchase announcement, what do you expect the price of Cyberdyne to be months from now?
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