When a Firm Pays Out a Dividend,the Share Price ________,And

question 32

Multiple Choice

When a firm pays out a dividend,the share price ________,and when it conducts a share repurchase at the market price,the share price ________.

• A)increases,increases
• B)is unchanged,decreases
• C)decreases,decreases
• D)decreases,is unchanged
• E)decreases,increases

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Definitions:

10-Year Bond

A long-term debt security issued by governments or corporations with a maturity of ten years.

Transaction

The act of conducting a trade or business deal involving the exchange of goods, services, or financial assets.

Signaling

A concept in economics and finance where agents indirectly convey information about their qualities or intentions through their actions.

Liquidity

With respect to a company, the ability to pay its bills in the short run. With respect to an asset, the readiness with which it can be converted to cash.