Refer back to Problem 18. Assume no taxes and a stock price immediately after the dividend announcement of $100.
a. If you own 100 shares, what is the value of your investment? How does the dividend payment affect your wealth?
b. Now suppose that Formaggio Vecchio cancels the dividend payment and announces that it will repurchase 1% of its stock at $100. Do you rejoice or yawn? Explain.
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