Question
Corp. is valued at $42,000 and has 14,000 shares of stock outstanding today. The board of directors will pass a resolution tomorrow to pay a
Corp. is valued at $42,000 and has 14,000 shares of stock outstanding today. The board of directors will pass a resolution tomorrow to pay a dividend of $1 per share to all shareholders. Which of the following statement is true? Assume no other news would change the firms fundamentals. Ignore tax.
A. | The stock price is $2 on the business day before the ex-dividend date and $2 on the dividend payment date. | |
B. | The stock price is $2.5 on the ex-dividend date and $2 on the dividend payment date. | |
C. | The stock price is $3 on the announcement date and $2 on the ex-dividend date. | |
D. | The stock price is $3 on the record date and $2 on the dividend payment date. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started