The Share Price Falls When a Dividend Is Paid Because

question 69

Multiple Choice

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

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

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Definitions:

Holder In Due Course

A legal term for a person who has acquired a negotiable instrument in good faith and for value, and thus is protected against certain defenses and claims that could be raised against the original payee.

Payee

The party in a transaction who receives the payment.

Properly Delivered

Pertains to goods or documents being conveyed to the correct recipient in good condition and within the agreed timeframe.

Bearer Paper

A negotiable instrument that is payable to whoever holds the document; the physical possession of the document is the only requirement for entitlement to payment.