Why Are Dividend Changes Rather Than the Absolute Level of Dividends

question 92

Multiple Choice

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

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

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