The Manager of XYZ Corp

question 76

Multiple Choice

The manager of XYZ Corp.feels that a dividend increase will increase stock price because many investors value stock with a dividend-discount model.Why might MM disagree with this assertion?

• A)the increased dividend makes the firm much riskier.
• B)future dividend growth may slow due to less retained earnings.
• C)investors prefer capital gains over dividends.
• D)dividend increases will increase the book value but not the market value of the firm.

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