Bonds to react to the announcement

Reference no: EM13963158

1. RJR Nabisco, in response to stockholder pressure in 1996, announced a significant increase in dividends paid to stockholders financed by the sale of some of its assets. What would you expect the stock price to do? Why?

2. RJR Nabisco also had $10 billion in bonds outstanding at the time of the dividend increase in Problem 1. How would you expect the bonds to react to the announcement? Why?

Reference no: EM13963158

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