Two Identical Companies with Identical Share Prices (And Identical Numbers

question 98

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:

Work Independently

The ability to perform tasks and solve problems without relying on assistance from others.

Feel More Confident

The process or state of gaining higher self-assurance and trust in one's abilities.

Brainstorming Session

A group activity aimed at generating a wide range of ideas or solutions to a problem through spontaneous and free-flowing discussion.

Independently

Acting on one's own; making decisions or taking action based on one's own judgment without relying on others.