Which One of the Following Signals Is Most Likely to Elicit

question 62

Multiple Choice

Which one of the following signals is most likely to elicit a decrease in share price?

• A) A repurchase of 5% of the firm's stock
• B) An increase in the regular quarterly dividend
• C) A decrease in the regular quarterly dividend
• D) Borrowing funds in order to pay a cash dividend

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Definitions:

Total Equity

The sum of the ownership interest in a corporation, including common and preferred shares.

Stock Repurchase

The process by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares.

Cash Dividends

Payments made by a corporation to its shareholders out of its profits or reserves in the form of cash.

Tax Laws

are the legal rules and regulations governing how individuals, businesses, and other entities are taxed by the government.