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:

Protective Layer

A covering or barrier that shields an object, surface, or organism from harmful external factors.

Sensory Adaptation

Sensory Adaptation depicts the process by which individuals become less sensitive to unchanging stimulus over time as the sensory receptors diminish their response.

Litter Box

A container filled with loose, absorbent material, used for cats to excrete in indoors.

Odor

A distinctive smell or the quality of a thing that can be perceived by the olfactory sense.