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

question 42

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:

Jean Piaget

A Swiss psychologist known for his pioneering work in child development and his theory of cognitive development.

Legacy

Something handed down from the past, such as property, traditions, or reputation, influencing the present and future.

Habituation Study

Research method that examines how repeated exposure to a stimulus decreases individuals' responses to it over time.

Just-noticeable Difference

The minimum level of stimulation change required to detect a difference between two stimuli.