Various Management Actions Provide Investors with Clues as to the Future

question 14

Multiple Choice

Various management actions provide investors with clues as to the future prospects for the firm. Which of the following actions by management contains the most important economic information for common stock investors?

• A) A 20 percent increase in cash dividends per share
• B) A 100 percent stock dividend
• C) A 2-for-1 stock split
• D) a, b, and c are equally important.

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Definitions:

Ratification

The act of accepting and giving legal force to an obligation that previously was not enforceable.

Legal Force

the effect or power of law enforced by judicial or governmental institutions to mandate compliance or punish violations.

Mentally Incompetent

A legal status indicating that an individual lacks the mental capacity to manage their own affairs or make important decisions.

Adjudged

Adjudged means to make a formal decision or judgment about something, often used in a legal context.