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3 (circle the correct answer) Assume the stock market is efficient and that the share price of SmartEcon305 Inc. is $85. The company now announces
3 (circle the correct answer) Assume the stock market is efficient and that the share price of SmartEcon305 Inc. is $85. The company now announces its financials. It states that it will pay a dividend of $6.00 tomorrow; and that dividends will grow by 4% annually from now onwards. If the market believes this announcement and the required rate of return is 12%, then: (a) The share price drops to $75 (b) The share price drops to $81 (c) The share price stays constant because the market is efficient (d) None of a-c are correct
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