If a Company Announces a Change in Its Dividend Policy

question 27

True/False

If a company announces a change in its dividend policy from a zero target payout ratio to a 100% payout policy, this action could be expected to increase the value of long-term options (say 5-year options) on the firm's stock.

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Definitions:

Carrying Amount

The carrying amount is the value of an asset as represented in the accounting records, factoring in depreciation, amortization, and impairment costs.