Which of the Following Statements Is FALSE

question 42

Multiple Choice

Which of the following statements is FALSE?

• A)Firms adjust dividends relatively infrequently,and dividends are much less volatile than earnings.This practice of maintaining relatively constant dividends is called dividend signaling.
• B)When a firm increases its dividend,it sends a positive signal to investors that management expects to be able to afford the higher dividend for the foreseeable future.
• C)The average size of the stock price reaction increases with the magnitude of the dividend change,and is larger for dividend cuts.
• D)When managers cut the dividend,it may signal that they have given up hope that earnings will rebound in the near term and need to reduce the dividend to save cash.

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Definitions:

Environmental Factors

Conditions and elements that exist outside the individual, influencing their behavior, development, and life processes.

Observable Behaviors

Observable behaviors are actions or reactions of an individual that can be visually monitored and recorded by others.

Internal States

Psychological conditions or feelings that arise from within an individual, such as emotions, moods, desires, or motivations.

Conscious Behaviors

Actions and responses that involve awareness and purposeful decision-making.