Toronto Skaters Company Has Just Declared Its Regular Dividend of $1

question 18

Multiple Choice

Toronto Skaters Company has just declared its regular dividend of $1 per share.On March 1, the share traded at $5 per share.The next day, the ex-dividend date, what do we expect to see?

• A)The share price fall by $1.
• B)The share price fall by less than $1 due to investor taxes.
• C)The share price fall by more than $1 due to investor taxes.
• D)The share price rise by less than $1 due to investor taxes.

---

Definitions:

Fiscal Policy

Government policies concerning taxation and spending that are aimed at influencing economic conditions, including promoting economic growth, controlling inflation, and reducing unemployment.

Government Deficit

Occurs when a government's expenditures exceed its revenues during a specific period, leading to borrowing or drawing from reserves.

Discretionary Fiscal Policy

Government policies that involve changes in taxation and spending to influence the economy, used to manage economic cycles.

Countercyclical

An economic or fiscal policy or measure that moves in opposition to the business cycle, designed to reduce the volatility of the economic cycle by decreasing spending in booms and increasing it in recessions.