When We Move from Assuming No Dividends to Assuming a Constant

question 18

Multiple Choice

When we move from assuming no dividends to assuming a constant dividend yield,which of the following is true for a Cox,Ross,Rubinstein tree?

• A) The parameters u and p change
• B) p changes but u does not
• C) u changes but p does not
• D) Neither p nor u changes

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Definitions:

Economic Costs

The total cost of choosing one action over another, including both explicit costs (direct outlays) and implicit costs (opportunity costs).

Entrepreneur's Talent

The unique set of skills, knowledge, and intuition that an entrepreneur possesses, enabling them to identify, evaluate, and exploit business opportunities.

Annual Lease

A contract that allows for the rental of a property for a period of one year.

Implicit Costs

The opportunity costs of using resources that a company already owns, essentially the income the company could have earned by using these resources in another way.