Question: The correct answer is A. Please explain how to solve. 4. A firm's current stock price is $20 per share and the firm is planning

The correct answer is A. Please explain how to solve.

The correct answer is A. Please explain how to solve. 4. A

4. A firm's current stock price is $20 per share and the firm is planning a $1 per share cash dividend. The stock's ex-dividend day is tomorrow. Assuming markets are perfect and using the other assumptions in Miller and Modigliani (1961), what is tomorrow's expected stock price? (Focus solely on the effects of the cash dividend and ignore other events, news stories, changes in the overall market, etc. that could also affect the stock price.) A. Tomorrow's stock price is expected to be $19. B. Tomorrow's stock price is expected to be $21

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