Question
Which of the following statements is/are true? i. A company that was not paying dividends earlier decides to start paying dividends. But the stock price
Which of the following statements is/are true?
i. A company that was not paying dividends earlier decides to start paying dividends. But the stock price does not change because of this change in dividend policy. Then, the forward prices of its stock are expected to increase because of this change in dividend policy as per the cost-of-carry model.
ii. Changes in interest rates and storage costs have opposite effects on forward prices.
iii. In times of expected future difficulties in procuring a commodity used in production, its forward prices are higher (assuming everything else remains the same).
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