General Electric announces that it is going to cut its dividends by $0.02 per share in the future. This, everything else remaining the same, will cause its current stock price to ________.
A) increase
B) decrease
C) remain the same
D) fluctuate

Question

Quizplus · Accepted Answer

Cutting dividends typically signals to investors that the company is facing financial difficulties or expects lower earnings in the future. As a result, some investors may choose to sell their shares, causing the stock price to decrease. Therefore, the current stock price will decrease with the announcement of the dividend cut.

General Electric Announces That It Is Going to Cut Its