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Suppose a stock that has never paid a dividend suddenly and unexpectedly announces that it will pay a $5 dividend in two months. Two- and
Suppose a stock that has never paid a dividend suddenly and unexpectedly announces that it will pay a $5 dividend in two months. Two- and three-month zero-coupon bonds are trading at 0.98 and 0.97, respectively. At the time of the announcement the three-month forward price of the stock should:
a.
Fall $5.15.
b.
Fall $5.10.
c.
Fall $5.00.
d.
Fall $5.05.
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