Question
Suppose two equally risky shares, Div and Cap, offer the same ex- pected return before tax. Div shares pay a generous dividend but offer low
Suppose two equally risky shares, "Div" and "Cap", offer the same ex- pected return before tax. Div shares pay a generous dividend but offer low expected capital gains. Cap shares pay low dividends but offer high expected capital gains. Which of the two shares would a pension fund prefer? An individual? A corporation? Explain your answer?
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Fundamentals of Corporate Finance
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim
6th Canadian edition
1259024962, 978-1259024962
