Solved

Assume an Investor Wants Cash Flow of $1100 in Year

Question 341

Multiple Choice

Assume an investor wants cash flow of $1100 in year one and $890 in year two. They own shares of a firm's stock which has proposed a dividend for this investor of $1000 per year. Is the investor able to undo the firms dividend policy, if so, how? (Assume a 10% return, no fees or taxes)


A) Yes, the investor should create a homemade dividend by selling $200 worth of stock.
B) Yes, the investor should create a homemade dividend by selling $100 worth of stock.
C) Yes, the investor should create a homemade dividend by buying $200 worth of stock.
D) Yes, the investor should create a homemade dividend by buying $100 worth of stock.
E) No, it is not possible to undo the new dividend policy.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents