Everything Else Equal, If a Firm Increases the Dividend That

question 33

Multiple Choice

Everything else equal, if a firm increases the dividend that it pays from $4 to $5:

• A)more money will be available to invest in capital budgeting projects.
• B)its future growth rate will decrease.
• C)demand for the stock will decrease among investors who prefer to receive current income from their investments.
• D)the firm should expect many of the investors who held the stock prior to the increase to sell their stock
• E)its operating income will increase.

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Definitions:

Buyers Identify

The process in which buyers recognize their needs or wants that can be satisfied by purchasing goods or services in the market.

Demographic Segmentation

The division of a market into segments based on variables such as age, gender, income, education level, or marital status to target specific consumer groups.