Why Are Dividend Changes Rather Than Their Absolute Level Perceived

question 1

Multiple Choice

Why are dividend changes rather than their absolute level perceived to be more important to managers and shareholders?

• A)Managers only change dividends under threatening conditions
• B)Dividend changes are thought to signal future expectations
• C)MM states that the absolute level of dividends is irrelevant
• D)Changes determine whether borrowing must occur

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Definitions:

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its identifiable net assets.

Intangible Assets

Non-physical assets that have value due to their intellectual or contractual rights, such as patents, trademarks, copyrights, and goodwill.

Company Reputation

The public perception of a company, influenced by its actions, reliability, product quality, and ethics.

Cost of Land

The price paid for a piece of land, including purchase price, closing costs, and any improvements necessary to make the land usable.