One reason that may explain why dividend policy is relevant to investors is that:
A)shareholders are indifferent between dividend income and capital gains income.
B)valuable inside information is conveyed by announcements of dividend changes.
C)investors,in general,prefer investments in companies that pay dividends.
D)investors do not trust dividend projections.

Question

Quizplus · Accepted Answer

Announcements of dividend changes can provide valuable insights into the financial health and future prospects of a company, making dividend policy relevant to investors. This information can influence investor sentiment, stock prices, and investment decisions. Additionally, some investors may prefer dividend-paying companies, either because they value reliable income streams or they perceive such companies as more stable and financially secure. However, there is no evidence to suggest that investors are universally indifferent between dividend income and capital gains income, nor that they do not trust dividend projections.

One Reason That May Explain Why Dividend Policy Is Relevant