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For the Past 10 Years, Green Thumb Shrubbery Has Paid

Question 25

Multiple Choice

For the past 10 years, Green Thumb Shrubbery has paid a very handsome dividend such that the dividend yield normally has been approximately 10 percent.The holder-of-record date for the next dividend payment is tomorrow.Sally Anderson just bought Green Thumb's stock a few minutes ago.As a result and assuming the stock's price has been stable for the past couple of days, the price Sally paid for her stock should have been


A) greater than it was a couple of days ago because she will get the next dividend paid by Green Thumb, which is expected to be fairly substantial.
B) less than it was couple of days ago because she will not receive the next dividend paid by the company.
C) approximately the same as it was a couple of days ago because the stock's price has been stable and the next dividend should not affect the current price of the stock.
D) differ from what it was a couple of days ago because the prices of all stocks constantly fluctuate; but there is not enough information to determine whether the price will be higher or lower than it was previously.
E) None of the above is a correct answer.

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