The Manager of XYZ Corp

question 76

Multiple Choice

The manager of XYZ Corp.feels that a dividend increase will increase stock price because many investors value stock with a dividend-discount model.Why might MM disagree with this assertion?

• A)the increased dividend makes the firm much riskier.
• B)future dividend growth may slow due to less retained earnings.
• C)investors prefer capital gains over dividends.
• D)dividend increases will increase the book value but not the market value of the firm.

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Definitions:

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Pertaining to or decorated with beads; often used in reference to jewelry, clothing, and adornments.

Yupik Eskimo

Indigenous people from the western, southwestern, and southcentral Alaska and the Russian Far East, known for their unique culture and subsistence lifestyle.

Ceremonial Tradition

Practices and rituals performed on significant occasions or to honor cultural, religious, or social norms and values.

Whale

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