One Reason That May Explain Why Dividend Policy Is Relevant

question 8

Multiple Choice

One reason that may explain why dividend policy is relevant to investors is that:

• A)shareholders are indifferent between dividend income and capital gains income.
• B)valuable inside information is conveyed by announcements of dividend changes.
• C)investors,in general,prefer investments in companies that pay dividends.
• D)investors do not trust dividend projections.

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Definitions:

Learned Behavior

Actions or reactions that an individual acquires through experience or by being taught.

John Maynard Keynes

A British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments.

Economic Growth

An increase in the production of goods and services in an economy over a period of time, usually measured by GDP.

Private Sector

The part of the economy that is owned and operated by individuals and private companies, as opposed to being controlled by the government.