Investor Reactions to a Change in the Dividend Payout of a Firm

question 40

Multiple Choice

Investor reactions to a change in the dividend payout of a firm attributable to expectations concerning future dividends is referred to as the _____ effect.

• A) Institutional investor.
• B) Clientele.
• C) Information content.
• D) Residual dividend.
• E) Reactive dividend.

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Definitions:

Financial Markets

Platforms or systems where buyers and sellers engage in the trading of financial assets such as stocks, bonds, currencies, and derivatives.

Benchmark

A standard or point of reference against which things may be compared or assessed.

Agency Problem

A conflict of interest between a company's management and its shareholders, where the management may act in their own best interests rather than those of the shareholders.