The Information Content of a Dividend Increase Generally Signals That

question 50

Multiple Choice

The information content of a dividend increase generally signals that:

• A) The firm has a one-time surplus of cash.
• B) The firm has few, if any, net present value projects to pursue.
• C) Management believes that the future earnings of the firm will be strong.
• D) The firm has more cash than it needs due to sales declines.
• E) Future dividends will be lower.

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Definitions:

Taxation

The process by which governments impose charges on citizens and corporate entities to fund public expenditures and services.

Jean Baptiste Colbert

was a French politician who served as the Minister of Finances of France under King Louis XIV, known for his policies aimed at strengthening the French economy through mercantilism.

Federal Tax

A tax levied by the federal government on income, corporate profits, and other aspects of the financial activity within a country.

Cigarettes

are small cylinders of finely cut tobacco leaves rolled in thin paper for smoking, often containing chemical additives.