Bilbao Vizgaggins owns shares in a company that does not pay dividends.Unfortunately,Vizgaggins requires a $100,000 dividend this period.If Vizgaggins owns 10,000 shares in the company and they are worth $200 per share,what can he do to produce the effect of the required dividend (ignore all tax effects)?

Question

Quizplus · Accepted Answer

By selling 500 shares of his stock at $200 per share, Vizcaggins would raise $100,000 (500 shares * $200/share), effectively creating the cash flow he desires, similar to receiving a dividend.

Bilbao Vizgaggins Owns Shares in a Company That Does Not