Gordon and Lintner, Recognizing That Dividends Affect Stock Prices, Suggest

question 26

Multiple Choice

Gordon and Lintner, recognizing that dividends affect stock prices, suggest that positive effects of dividend increases are attributable ________.

• A) directly to the dividend policy
• B) directly to the optimal capital structure
• C) not to the informational content but to the consistency in the payment of dividends
• D) to the informational content of the dividends with respect to future earnings

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Definitions:

Inductive Reasoning

A method of reasoning in which general conclusions are drawn from specific observations or instances.

Probabilistic Conclusions

Inferences or outcomes derived from reasoning that incorporate the principles of probability, often used in scenarios where outcomes are uncertain.

Empirical Arguments

Arguments based on observed and recorded evidence.

Replicate

To duplicate or reproduce an experiment, study, or procedure to verify its results.