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Jim Simpson, the founder of Simpsons Saxophones, knows much about saxophones but little about finance. The other day he was alarmed when his companys stock

  1. Jim Simpson, the founder of Simpsons Saxophones, knows much about saxophones but little about finance. The other day he was alarmed when his companys stock price, which had been $50 per share, fell to $48.50 per share. The reason he was alarmed was because he knew things were going well for the firm, and that no bad news had been released. Explain to Jim how dividends might explain the movement in share price.

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