Assume an investor wants cash flow of $1000 per year. They own shares of a firm's stock which has proposed a dividend for this investor of $1100 in year one and $890 in year two. 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:
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