Which of the Following Statements Is Most Plausible

question 32

Multiple Choice

Which of the following statements is most plausible?

• A)Increases in share price associated with a dividend increase are likely due to information conveyed by the increase.
• B)Increases in share price associated with a dividend increase are likely due to changes in the company's capital structure.
• C)Increases in share price associated with a dividend increase are likely due to investors' preference for dividends over capital gains.
• D)Increases in share price associated with a dividend increase are likely due to the favorable tax treatment of dividends over capital gains.

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Definitions:

Establishing Responsibilities

A principle of internal control that aims to clearly define roles and duties within an organization to ensure accountability and efficient operations.

Internal Control System

A process employed by an organization to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.

Risk of Loss

The potential for an investment's actual return to differ from the expected return, including the possibility of losing some or all of the original investment.

Profitable Operations

Operations within a business that generate more revenue than the costs incurred to perform them, leading to a profit.