Company a and Company B Both Paid a $2 Per

question 15

Multiple Choice

Company A and Company B both paid a $2 per share dividend last year.This year,Company A announces an increase to $3 per share while Company B announces an increase to $2.50 per share.After the announcement,the price of Company B stock increases and the price of Company A's stock decreases.Which of the following best explains this situation?

• A) The stock market is irrational.
• B) Company A had higher agency costs than Company B prior to the announcement.
• C) Both companies need to raise capital for positive NPV projects and flotation costs are high.
• D) Capital markets are perfect.

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Definitions:

Graphic Rating Scale

A method for assessing performance that involves marking an individual's level of achievement along a linear scale.

360-degree Feedback

A performance appraisal method where employees receive confidential, anonymous feedback from the people who work around them, including peers, managers, and direct reports.

Perceptual Errors

Mistakes in judgment or interpretation made due to the subjective nature of perception.

Appraisal Accuracy

The degree to which performance evaluations accurately reflect the true performance levels of employees, free from biases or errors.