High Dividends May Increase Stock Values Due to All of the Following

question 106

Multiple Choice

High dividends may increase stock values due to all of the following reasons EXCEPT

• A) dividends are more certain than capital gains.
• B) higher dividends are used to signal higher expected future earnings.
• C) dividends are used as a tool to minimize agency costs.
• D) higher dividends allow companies to increase their proportion of external equity financing.

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Definitions:

Dopamine

Neurotransmitter in the brain, excess amounts of which have been thought to cause schizophrenia.

Reuptake

Process in which a sending neuron reabsorbs some of the neurotransmitter in the synapse, decreasing the amount left in the synapse.

Cocaine

A powerful stimulant drug derived from the coca plant, known for its euphoric effects and high potential for addiction.

Hypersexuality

A condition characterized by excessive preoccupation with sexual fantasies, urges, or behaviors that may lead to distress or impairment in social, occupational, or other important areas of functioning.