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Company A pays a dividend of 2%. Company B's stock price increases 1% plus the inflation rate every year. Company C pays 3% dividends, and its stock price decreases every year by 2%. Company D pays 0% dividends, and its stock price does not increase year over year. If the companies are other wise identical, which would you invest in?

a. Company C
b. Company B
c. Company D
d. Company A

Respuesta :

I would invest in company B..

Company A pays a dividend of 2%.

For company B, the stock price increases 1% plus the inflation rate every year. In this case, there'll be an Inflation rate which will make it worthwhile when added to the increase in stick price.

Company C isn't worthwhile as there's a stock price decrease every year by 2%.

Company D pays the dividend of 0%.

In conclusion, the correct option is B.

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