Impact from rapid dividend growth on stock current price

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Reference no: EM132028707

1. The impact from rapid dividend growth on a stock's current price will be:

a. negative, since the company is paying out profits to stockholders.

b. positive since rapid dividend growth causes stockholders to expect higher future dividends.

c. zero; only current dividends are used to determine the current price of a stock.

d. positive, but only if the corporation does not have any debt.

2. The current spot rate is $.58/SF. The 6-month forward rate is $.63/SF. A call option that expires in 6-months on 100,000 SF with a strike price of $.60/SF is selling for $1,900. A put option that expires in 6-months on 100,000 SF with a strike price of $.60/SF is selling for $600. Six months from now, the spot rate will be $.62/SF (this information is unknown right now, but I’m telling you). If you entered into a contract to sell 100,000 SF in the forward contract, how much would you have made (lost)?

a. Lost $1,900

b. Lost $600

c. Made $1,000

d. Made $2,000

Reference no: EM132028707

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