If Investors Do Not Like Dividends Because of the Additional

question 16

Multiple Choice

If investors do not like dividends because of the additional taxes that they have to pay, how would you expect stock prices to behave on the ex-dividend date?

• A)Fall by more than the amount of the dividend
• B)Fall exactly by the amount of the dividend
• C)Fall by less than the amount of the dividend
• D)Cannot be predicted.

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Definitions:

Sunbeams

Streams of sunlight that penetrate through breaks in the clouds or obstacles, visibly illuminating paths of light.

Computer Programs

Sequences of instructions written to perform a specified task with a computer.

Methanol

A simple alcohol used as a solvent, antifreeze, fuel, and as feedstock for chemical manufacturing.

Ethanol

A renewable, flammable liquid alcohol used as a biofuel additive for gasoline and as a solvent in the chemical industry.