The Empirical Observation That Stock Prices Fall on Ex-Dividend Days

question 23

Multiple Choice

The empirical observation that stock prices fall on ex-dividend days by significantly less than the amount of the dividend has been often interpreted

• A) as completely unexplainable by researchers.
• B) as evidence that dividends are more highly valued than capital gains.
• C) as evidence of a tax effect in dividend valuation.
• D) none of the above.

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Definitions:

Variable Input(s)

Inputs or resources whose quantity can be changed in the short term to adjust the level of production.

Short Run

A period in economics where at least one factor of production is fixed, limiting the adjustments a firm or industry can make.

Inputs

Resources such as labor, materials, and capital that are used in the production process to create goods and services.

Output

The total amount of goods or services produced by an individual, firm, or country over a specific period.