The Information Content of a Dividend Increase Generally Signals That

question 28

Multiple Choice

The information content of a dividend increase generally signals that:

• A) the firm has a one-time surplus of cash.
• B) the firm has few, if any, net present value projects to pursue.
• C) management believes that the future earnings of the firm will be strong.
• D) the firm has more cash than it needs due to sales declines.
• E) future dividends will be lower.

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Definitions:

Time Series Data

Data that is collected at successive points in time, often analyzed to study trends, cycles, or seasonal variations over time.

Extended Period

A length of time that is longer than usual or expected.

Collected

Gathered or amassed from different sources, often referring to data, samples, or other information.

Cross-sectional

A type of observational study that analyzes and compares data from a population, or a representative subset, at one specific point in time.