Final Exam Problem 6 15 Points 1. The stock pays a dividend. Which statement is true? The stock price will be 4 points A. higher after the dividend is paid B. same both before and after dividend is paid C. lower after the dividend is paid After dividend is paid Cash to pay dividend Other assets Total market value million share out Before dividend is paid 100 800 900 20 800 800 Assume the investor owns 400 shares. How much is the total dividend the investor will receive? 3 points What action can the investor take so she/he can have the equivalent of a dividend policy, 20% smaller per share than the actual one paid by the company? Meaning the cash dividend is 80% of actual dividend paid out. 4 points A. The investor will sell 40 share of stock and add money to dividend money received from the company. B. The investor will sell 10 share of stock and add to money to dividend money received from the company. C. The investor will buy 40 shares of stock using dividend money received from the company D. The investor will use the part of the dividends to buy 10 shares of stock. A company has $200 million in debt and $800 million in equity. An investor prefers companies with 30% debt. But the investor likes this company. What should the investor do to satisfy his desire to own this company and meet his leverage requirement? Assume the investment is $500. 4 points A. Invest $150 in treasuries and $350 in this company B. Invest $350 in Treasury securities and $150 in this company C. Invest all $500 in this company D. Invest all $500 and borrow an additional $100 and invest all $600 in this comp

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