A Corporation Announces a Large Increase in Its Annual Dividend,but

question 94

Multiple Choice

A corporation announces a large increase in its annual dividend,but its stock price declines.This could result from

• A) residual dividend theory.
• B) bird-in-the-hand theory.
• C) perfect capital markets.
• D) MM's indifference theorem.

---

Definitions:

Ledger Accounts

Individual records that provide in detail the transactions associated with a company's assets, liabilities, equity, revenue, and expenses.

Trial Balance

A bookkeeping report that lists the balances of all ledgers in two columns, debits and credits, ensuring that total debits equal total credits.

Debit

An accounting entry that increases asset or expense accounts, or decreases liability, equity, or revenue accounts.

Credit

An accounting entry on the right side of an account ledger, recording increases in liabilities, equity, and revenue, or decreases in assets and expenses.