Which of the following signals is most likely to elicit a decrease in share price?
A) A repurchase of 5% of the firm's stock
B) An increase in the regular quarterly dividend
C) A decrease in the regular quarterly dividend
D) Borrowing funds in order to pay a cash dividend

Question

Quizplus · Accepted Answer

A decrease in the regular quarterly dividend may signal to investors that the company is struggling or not generating enough cash to support the dividend payment, which may lead to a decrease in share price. The other options can be seen as positive signals by investors and therefore may lead to an increase in share price.

Which of the Following Signals Is Most Likely to Elicit