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

question 57

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:

Skewness

A measure of the asymmetry of the probability distribution of a real-valued random variable about its mean.

Simple Random Sample

A selection from a larger population where every member has an identical chance of being picked.

T Procedures

Statistical methods based on the t-distribution, used for hypothesis testing and confidence interval estimation, mainly when sample sizes are small.

Sample Size

The number of observations or data points collected in a sample from a larger population, used in statistical analysis.