Bilbao Vizgaggins Owns Shares in a Company That Does Not

question 9

Multiple Choice

Bilbao Vizgaggins owns shares in a company that does not pay dividends.Unfortunately,Vizgaggins requires a $100,000 dividend this period.If Vizgaggins owns 10,000 shares in the company and they are worth $200 per share,what can he do to produce the effect of the required dividend (ignore all tax effects) ?

• A) sell 500 shares of his stock
• B) sell 5000 shares of his stock
• C) buy 500 more shares of the stock
• D) there is nothing that he can do

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Definitions:

Annual Payments

Annual payments refer to the total amount of money that is paid out or required to be paid each year, often related to loans, annuities, or dividends.

Borrowed

The act of obtaining or receiving funds or goods with the promise or understanding of returning or repaying the lender at a later date, usually with interest.

Interest Rate

The proportion, in a percentage, at which interest is paid by borrowers for the use of money that they borrow from a lender. It is a critical component of the credit markets.

Years

A unit of time equal to 365 days (or 366 days in a leap year), used in calendar timekeeping.