Problem

a. Wotan owns 1,000 shares of a firm that has just announced an increase in its div­idend...

a. Wotan owns 1,000 shares of a firm that has just announced an increase in its div­idend from $2.00 to $2.50 a share. The share price is currently $150. If Wotan does not wish to spend the extra cash, what should he do to offset the dividend increase?


b. Brunhilde owns 1,000 shares of a firm that has just announced a dividend cut from $8.00 a share to $5.00. The share price is currently $200. If Brunhilde wishes to main­tain her consumption, what should she do to offset the dividend cut?

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Solutions For Problems in Chapter 16