The Signaling Effect Theory of Dividend Policy Suggests That

question 13

Multiple Choice

The signaling effect theory of dividend policy suggests that

• A)management will increase dividends to signal "good times" even if they believe the dividend level is not sustainable.
• B)an increase in the dividend payout ratio signals that management has acquired a major ownership interest in the firm.
• C)management will be reluctant to cut dividends if the firm is expecting what they believe are temporary financial difficulties.
• D)Both A and B are true.

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Definitions:

Cultural Development

The process through which a society's cultural elements such as norms, values, and practices evolve over time.

Upward Mobility

The ability for an individual or group to improve their economic status, often through education, career advancements, or increased income.

Colonial Explorer

Individuals who explored and charted new territories for their respective nations during the period of colonial expansion, often leading to the establishment of colonies.

Indigenous People

Indigenous people are ethnic groups who are the original inhabitants of a given region, having distinct cultures, languages, and traditions, often facing exploitation and dispossession.