a. Wotan owns 1,000 shares of a firm that has just announced an increase in its dividend

Question:

a. Wotan owns 1,000 shares of a firm that has just announced an increase in its from $2.00 to $2.50 a share. The share price is currently $150. If Wotan does not wish to spend the extra cash, what should he do to offset the increase?
b. Brunhilde owns 1,000 shares of a firm that has just announced a cut from $8.00 a share to $5.00. The share price is currently $200. If Brunhilde wishes to maintain her consumption, what should she do to offset the cut?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...