If a Share Price Increased After a Dividend Increase, Investors

question 111

True/False

If a share price increased after a dividend increase, investors probably interpreted the increase as a signal from management that the company expects sustainably higher cash flows in the future.

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Definitions:

SRMC

Short-Run Marginal Cost, which refers to the cost of producing one more unit of a good or service in the short term.

Acquired Firm

A company that has been purchased and taken over by another company.

Substitutes

are products or services that can replace or be used in place of another, catering to similar needs or functionalities, often influencing consumer choices and market dynamics.

Substitute Good

A product or service that can be used in place of another to satisfy similar needs or demands.