Wotan owns 1,000 shares of a firm that has just announced an increase in its div - idend 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?

Question

Business

Sage Baird

1 November, 03:11

Wotan owns 1,000 shares of a firm that has just announced an increase in its div - idend 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?

+1

Answers (1)

Know the Answer?

Bibbles · Answer 1

Ans : Wotan can reinvest the whole amount (1000 X 0.50 = 500) in the stock. If the ex-dividend price is $ (150 - 2.50) = 147.50, this should involve the purchase of 500 / 147.50, or about 3 shares of the firm.