Problemtwo corporations a and b have exactly the same risk, Ask an Expert

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Problem:

Two corporations A and B have exactly the same risk, and both have a current stock price of $100. Corporation A pays no dividend and will have a price of $120 one year from now. Corporation B pays dividends and will have a price of $113 one year from now after paying the dividend. The corporations pay no taxes and investors pay no taxes on capital gains, but pay a 30% income on dividends.

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Question: What is the value of the dividend that investors expect corporation B to pay one year from today?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91148049

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