Suppose the Risk-Free Interest Rate Is 4

question 65

Multiple Choice

Suppose the risk-free interest rate is 4%.If Nielson borrows $150 million today at this rate and uses the proceeds to pay an immediate cash dividend,then according to MM,the expected return of Nielson's stock just alter the dividend is paid would be closest to:

• A) -17.5%
• B) -12.5%
• C) 12.5%
• D) 17.5%

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Definitions:

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