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Firm A can fall short, meet, or exceed its earnings forecast. Each of these events is equally likely. Whether firm A increases its dividend will depend upon these outcomes. Respectively, the probabilities of a dividend increase conditional on the firm falling short, meeting or exceeding the forecast are 20%, 30%, and 50%. The unconditional probability of a dividend increase is: A. 0.500. B. 1.000. C. 0.333. |