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    Consider two equally risky shares, Hi and Lo. Hi shares pay a generous dividend and offer low expected capital gains. Lo shares pay low dividends and offer high expected capital gains. Which of the following investors would prefer the Lo shares? Which would prefer the Hi shares? Which wouldn't care? Explain. Assume that any stock purchased will be sold after 1 year.
    a. A pension fund
    b. An individual
    c. A corporation

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    a. A Pension Fund does not care about income as dividends or capital gains because it is not a ...

    Solution Summary

    A scenario of risky shares is emphasized.