Question
Investor Tom owns 1,000 shares of Gust Companys common stock and its current market price per share is $120 per share. Gust Company declares to
Investor Tom owns 1,000 shares of Gust Companys common stock and its current market price per share is $120 per share. Gust Company declares to pay $20 dividend per share to its shareholders.
1)Tom prefers $12 dividend per share paid by Gust Company. To get his desired cash flow, how can he do it on ex-dividend date by home made dividend? indicate how many shares that he should buy or sell, on ex-dividend date.
2)Based on the above, is the dividend policy of a firm relevant to the firms value in a perfect capital market? No explanation is required
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