Assume That as the Result of a Firm Announcing a Large

question 98

Multiple Choice

Assume that as the result of a firm announcing a large unexpected increase in its dividend payment, the price of the firm's common stock rises. This event would be consistent with which of the following?

• A) The dividend irrelevance theory
• B) The tax preference theory
• C) The information effect
• D) The beta effect

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Definitions:

Confirmation Bias

The bias towards identifying, comprehending, choosing, and retaining information that corroborates one’s prior convictions or suppositions.

Social Input

The information or feedback received from others in a social context that can influence one's thoughts, feelings, and behaviors.

Prejudice

Preconceived opinion or bias against someone or something not based on reason or actual experience, often manifesting as discrimination or unjust behavior towards different social groups.

Scientific Method

A systematic procedure of observation, measurement, experiment, and the formulation, testing, and modification of hypotheses.