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You own 20,000 shares of stock in Short-Term Corp. The company is expected to pay a dividend of $5.1 per share in one year, and
You own 20,000 shares of stock in Short-Term Corp. The company is expected to pay a dividend of $5.1 per share in one year, and a liquidating dividend of $72 per share in two years. The required return on the stock is 12% and there are no taxes.
a) What is the current stock price?
b) If you prefer equal dividends in both years, how many shares should you buy (enter as a positive number) or sell (enter as a negative number) in one year (just after the dividend payout)?
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