Question
Hi, I need help with this question: Assume that only two stocks exist: IBM and USX. Their current prices are P0(IBM)=100 and P0(USX)=40 and both
Hi,
I need help with this question:
Assume that only two stocks exist: IBM and USX. Their current prices are P0(IBM)=100 and P0(USX)=40 and both stocks have the same beta. The expected dividend on IBM next year is $5 per share while it is $1.50 on the USX. If the pre-tax expected return on IBM is .11 next year and it is .105 on USX, which theory of dividend policy is supported this data. Please explain how you have arrived at the answer.
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Case Studies in Finance Managing for Corporate Value Creation
Authors: Robert F. Bruner, Kenneth Eades, Michael Schill
7th edition
007786171X, 77861711, 978-0077861711
