An Increase in Share Price Following an Increase in Dividends

question 113

Multiple Choice

An increase in share price following an increase in dividends is logical if the:

• A)Firm borrows to obtain cash for the dividend
• B)Increased dividend signals higher future earnings
• C)Financial markets are efficient
• D)Clientele effect is not important

---

Definitions:

LMX Theory

Leadership theory that emphasizes the relationships between leaders and individual members, focusing on the dynamics of trust and respect.

High-Quality Exchanges

Interactions between leaders and followers that are characterized by mutual trust, respect, and obligation, leading to enhanced performance.

Out-Group Members

Individuals who are not part of a specific group or community, often perceived as not fitting in or differing from the group's norms or values.

In-Group Members

Individuals within a group who share a strong identity and often receive more support and rewards from the leader.