Which of the Following Is True of a Dividend Payout

question 38

Multiple Choice

Which of the following is true of a dividend payout?

• A) When a firm announces that it will increase its dividend, the share price usually decreases on that news.
• B) Dividend payments send a positive signal to investors in the marketplace that management believes that the stock is overvalued.
• C) When a firm pays out dividends the share price will fall.
• D) Dividend payouts have no impact on the share price of a stock in an efficient market.

---

Definitions:

Equal Proportion

A division or allocation in the same or identical fractions, percentages, or portions.

Market Risk

The risk of losses in investments due to factors that affect the overall performance of the financial markets.

Coefficient of Variation

A statistical measure of the dispersion of data points in a data series around the mean, indicating the level of volatility.

Probability Distribution

A statistical analysis function that maps out all prospective values and their probabilities for a random variable within an established scope.