Which of the Following Is True Regarding the Information Effect

question 102

Multiple Choice

Which of the following is true regarding the information effect of dividend policies?

• A) Increases in dividends are seen as negative signals concerning the firm's performance.
• B) Increases in dividends are seen as negative signals concerning the firm's expected future cash flow levels.
• C) If a firm announces an increase in the next dividend, analysts see such announcements as a very positive signal.
• D) If a firm announces an increase in the next dividend, analysts see such announcements as a very negative signal.

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