Which Statement Related to the Signaling Effect of Dividends Is

question 160

Multiple Choice

Which statement related to the signaling effect of dividends is true?

• A)The signaling effect can explain why an increase in the dividend is often followed by an increase in stock price.
• B)The signaling effect is a reason a firm may follow a constant or steadily increasing dividend policy.
• C)Changes in dividends can be interpreted as a signal from management about changes in the company's future earnings.
• D)All of the above

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Definitions:

Promotional Alternative

Different methods or channels marketers use to advertise a product or service, aiming to increase visibility and demand.

Direct Communication

A method of interaction where messages are conveyed directly between parties without the use of intermediaries.

Individualized Communications

Customized messages aimed at catering to the interests or needs of individual recipients.

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