The Manager of XYZ Corp

question 96

Multiple Choice

The manager of XYZ Corp. feels that a dividend increase will increase the 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 lower 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:

Flight of Ideas

A rapid and continuous shifting of ideas and thoughts, often seen in manic episodes of bipolar disorder.

Body Dysmorphic Disorder

Body Dysmorphic Disorder is a mental health condition characterized by an obsessive focus on perceived flaws in one's appearance, which are often unnoticeable to others.

Psychological Disorders

Conditions characterized by abnormal thoughts, feelings, or behaviors that significantly interfere with daily life and functioning.

Distress

Negative stress that can result in anxiety or concern, often leading to decreased performance and mental strain.