An Increase in Share Price Following an Increase in Dividends

question 23

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) dividend is believed to be temporary.
• D) clientele effect is not important.

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Definitions:

Chordates

A large phylum of animals that includes all vertebrates as well as several closely related invertebrates, characterized by the presence of a notochord at some stage of their development.

Monotremes

Egg-laying mammals, such as the platypus and echidna, representing a unique branch of the mammalian tree.

Parthenogenesis

The development of an unfertilized egg into an adult organism; common among honeybees, wasps, and certain other arthropods.

Lay Eggs

The act of depositing eggs by a female organism, as a means of reproduction.