Suppose stock A sells for $50 per share and pays dividends of $2 per share per year. Stock B sells for $100 per share and pays dividends of $4 per share per year. Through the process of arbitrage,
We would expect the price of
A) stock A to fall and/or the price of stock B to rise.
B) stock A to rise and/or the price of stock B to fall.
C) both stocks to rise or fall together.
D) neither stock to change.
Correct Answer:
Verified
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