Suppose that on January 1, 2014, you bought 100 shares of M.Co for $100 per share with the expectation of receiving a perpetual dividend of $10 per share. On January 1, 2015, M.Co announces that it will increase its annual dividend to $20 per share. Upon announcement, the stock price rises to $200.
-If an investor bought 100 shares of M.Co on January 1,2015,what will be the expected return?
A)110 percent.
B)10 percent.
C)20 percent.

Question

Suppose that on January 1, 2014, you bought 100 shares of M.Co for $100 per share with the expectation of receiving a perpetual dividend of $10 per share. On January 1, 2015, M.Co announces that it will increase its annual dividend to $20 per share. Upon announcement, the stock price rises to $200. 
-If an investor bought 100 shares of M.Co on January 1,2015,what will be the expected return?
A)110 percent.
B)10 percent.
C)20 percent.

Quizplus · Accepted Answer

The Answer of Suppose that on January 1, 2014, you bought 100 shares of M.Co for $100 per share with the expectation of receiving a perpetual dividend of $10 per share. On January 1, 2015, M.Co announces that it will increase its annual dividend to $20 per share. Upon announcement, the stock price rises to $200. 
-If an investor bought 100 shares of M.Co on January 1,2015,what will be the expected return?
A)110 percent.
B)10 percent.
C)20 percent.

Suppose That on January 1, 2014, You Bought 100 Shares