Conservative Economists Feel That High Dividend Payouts Will Increase Share

question 103

Multiple Choice

Conservative economists feel that high dividend payouts will increase share price because:

• A)capital gains are less certain than dividends.
• B)dividends signal higher future earnings.
• C)stocks are priced using dividend discount models.
• D)higher dividend payouts translate into higher investment returns.

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Definitions:

Production Function

An equation that describes the maximum output achievable with a given set of inputs or resources.

Factor Price

The price paid for the use of a factor of production such as labor, capital, or land.

Factor Demand

Refers to the demand for resources or inputs that are used in the production of goods or services.

Long-Run Cost Function

The relationship between output quantities and total cost when all inputs, including capital, are variable in the production process.