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Alice is offered a stock of Cyclone Industrial Inc. The stock will issue an annual dividend of $ 1 . 5 forever, starting from next
Alice is offered a stock of Cyclone Industrial Inc. The stock will issue an annual dividend of $ forever, starting from next year. The stock will cost Alice $ today.
Alternatively, Alice can save $ in a bank. Under which of the following bank's annual interest rate would Alice save it in the bank rather than purchase the stock?
Hint: Alice would want to investigate whether the bank's return is higher than the return on the stock.
A
B
C Alice would want to save it in the bank with both and
D Alice wouldn't want to save it in the bank anyway since she could earn dividends from the stock forever.
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