Author Question: Dividends generally A) are paid as a fixed percentage of earnings. B) fluctuate more than ... (Read 35 times)

imowrer · **on:** Jul 10, 2018

Dividends generally

A) are paid as a fixed percentage of earnings.
B) fluctuate more than earnings.
C) are more stable than earnings.
D) are guaranteed by the SEC.

Question 2

Consider a value-weighted market index that includes the following two companies. On Day 1 you form a portfolio to mimic the index. (In other words, to earn the same return as the index.)

Company 1 Company 1 Company 2 Company 2
Day Price of Shares Price of Shares
1 6.62 200 10.00 750
2 7.24 200 10.54 750

What is the portfolio weight on Company 1, and what is the return on the portfolio from Day 1 to Day 2? (Weight , Return )
A) 14, 5
B) 14, 6
C) 15, 6
D) 15, 7
E) 16, 5