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

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Definitions:

Linear Regression Equation

A mathematical equation used to predict the value of a dependent variable based on one or more independent variables, assuming a linear relationship.

Pearson r

A measure of the linear correlation between two variables, ranging from -1 to 1, where 1 means a perfect positive linear relationship, -1 a perfect negative linear relationship, and 0 no linear relationship.

Number of Victimizations

The count or tally of instances in which individuals or entities are harmed or affected adversely, typically used in criminological and sociological research.

Scatterplots

A graph in which two variables are plotted along two axes, the pattern of the resulting points revealing any correlations.