Share Price Changes Around the Time of Announcements of Dividend

question 11

Multiple Choice

Share price changes around the time of announcements of dividend changes are positively related to the change in dividends.This evidence may not invalidate the dividend irrelevance theorem because:

• A)investors are indifferent between capital gains and dividend income.
• B)debt is not necessarily affected by such announcements.
• C)share prices revert back to pre-dividend levels following the announcement.
• D)it is not the dividend payments that determine the value of shares but information about the future cash flows that is conveyed by the announcement.

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Definitions:

Product V7

A hypothetical or specific version of a product, indicating the seventh iteration or release.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services based on their usage of resources.

Product F1

A specific product identified as F1, details of which would depend on the context in which it is referenced.

Direct Labor-Hours

The total hours worked by employees directly involved in manufacturing a product or providing a service.