In unprofitable times corporations sometimes suspend dividend payments. Suppose that after a dividend has been paid the next one will be paid with probability 0.9, while after a dividend is suspended the next one will be suspended with probability 0.6. In the long run what is the fraction of dividends that will be paid?

Intermediate Algebra
10th Edition
ISBN:9781285195728
Author:Jerome E. Kaufmann, Karen L. Schwitters
Publisher:Jerome E. Kaufmann, Karen L. Schwitters
Chapter11: Exponential And Logarithmic Functions
Section11.2: Applications Of Exponential Functions
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In unprofitable times corporations sometimes suspend dividend payments. Suppose
that after a dividend has been paid the next one will be paid with probability 0.9, while after a dividend is
suspended the next one will be suspended with probability 0.6. In the long run what is the fraction of dividends
that will be paid?
Transcribed Image Text:In unprofitable times corporations sometimes suspend dividend payments. Suppose that after a dividend has been paid the next one will be paid with probability 0.9, while after a dividend is suspended the next one will be suspended with probability 0.6. In the long run what is the fraction of dividends that will be paid?
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