The Increase in the Stock Price After a Dividend Increase

question 17

Multiple Choice

The increase in the stock price after a dividend increase is called the information content effect because:

• A) the change in dividend was expected by shareholders.
• B) the dividend increase signaled investors to adjust the expectations of future earning upward.
• C) the dividend change signaled investors to adjust the risk of the firm downward.
• D) the dividend change signaled shareholders that the firm could now payout less as they enter the mature phase of their business.

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Definitions:

Tax Requirements

The legal obligations for individuals and entities to file tax returns and pay taxes to federal, state, or local governments, as applicable.

Language Of Liberty

A term often associated with the rhetoric and ideals surrounding freedoms and rights, particularly those outlined in foundational U.S. documents such as the Declaration of Independence and the Constitution.

Free Black Population

African Americans who were not enslaved and lived freely, especially before the Civil War in the United States.