Q. Bill, Jim, and Shelly are all interested in buying the same stock that pays dividends. Bill plans on holding the stock for 1 year. Jim plans on holding the stock for 3 years. Shelly plans on holding the stock until she retires in 10years. Which one of the following statements is correct? (Solved)

1. Bill will be willing to pay the most for the stock because he will get his money back in 1 year when he sells.

2. Shelly should be willing to pay the most for the stock because she will hold it the longest and hence will get the most dividends.

3. All three should be willing to pay the same amount for the stock regardless of their holding period.

4. None of these