The Information Content of a Dividend Increase Generally Signals That

question 353

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:

Checking Account

Money stored in an account at a bank or other financial institution that can be withdrawn without advance notice; also called a demand deposit.

Credit Union

A member-owned financial cooperative that provides traditional banking services, like loans and savings accounts, with profits returning to members in the form of reduced fees and higher savings rates.