The Share Price Falls When a Dividend Is Paid Because

question 103

Multiple Choice

The share price falls when a dividend is paid because the reduction in cash decreases the ________.

• A) liabilities of the firm
• B) current account of the firm
• C) market value of assets
• D) equity of the firm

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Definitions:

Average Inventory

The mean value of inventory within a certain period, calculated by adding the beginning inventory and ending inventory and dividing by two.

Direct Labor

The labor cost directly associated with the production of goods, including wages for workers who physically convert materials into the finished product.

Raw Materials

The basic materials from which products are made, typically not yet processed or used in manufacturing.

Finished Products

Goods that have completed the manufacturing process but have not yet been sold or distributed to end customers.