The Idea That Dividend Changes Reflect Managers' Views About a Firm's

question 32

Multiple Choice

The idea that dividend changes reflect managers' views about a firm's future earnings prospects is called the ________ hypothesis.

• A) signaling
• B) predictor
• C) instrumental
• D) none of the above

---

Definitions:

Net Assets

The total assets minus total liabilities of an entity, representing the owners' equity.

Fair Value

The approximate cost at which an asset or liability might be traded between informed, consenting parties in a transaction without any prior relationship.

Subsidiary's Net Assets

The total assets minus the total liabilities of a subsidiary, representing the net worth of the subsidiary from the perspective of a parent company.

Carrying Amount

The value of an asset or liability as recorded on the balance sheet, taking into account depreciation, amortization, and impairment losses.