Generally,investors interpret the announcement of a decrease in dividends as:
A)bad news and the stock price drops.
B)good news and the stock price increases.
C)a nonevent and does not affect the stock prices.
D)very good news and the stock price jumps up.

Question

Quizplus · Accepted Answer

Investors generally view a decrease in dividends as bad news because it indicates that the company is experiencing financial difficulties or may not have enough cash to distribute to shareholders. This can lead to a drop in stock price as shareholders become less confident in the company's future prospects.

Generally,investors Interpret the Announcement of a Decrease in Dividends As