Two Identical Companies with Identical Share Prices (And Identical Numbers

question 83

Multiple Choice

Two identical companies with identical share prices (and identical numbers of shares outstanding) change their quarterly dividend by the same amount.However,Company A is increasing its dividend while Company B is decreasing its dividend.Choose the correct description of what should follow given the empirical evidence.

• A) Company A's price should increase by more than the decrease in Company B's price
• B) Company A's price should increase by less than the decrease in Company B's price
• C) Company B's price should increase by more than the decrease in Company A's price
• D) Company B's price should increase by less than the decrease in Company A's price

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Definitions:

Frequent Praise

Regularly expressing approval or admiration to reinforce positive behavior and motivate individuals or groups.

ERG Theory

A motivational theory developed by Clayton Alderfer that categorizes human needs into three groups: Existence, Relatedness, and Growth.

Three Stages

A conceptual division of a process or phenomenon into three sequential phases for easier understanding and analysis.

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The overall atmosphere within a company, influencing employees' behavior and work motivation.