When a firm ________ its dividend,it sends a ________ signal to investors that management expects to be able to afford the higher dividend for the foreseeable future.
A) decreases; positive
B) increases; negative
C) increases; positive
D) None of the above

Question

Quizplus · Accepted Answer

When a firm increases its dividend, it sends a positive signal to investors that management expects to be able to afford the higher dividend for the foreseeable future. This indicates that the firm is confident in its financial performance and has long-term sustainability. On the other hand, if a firm decreases its dividend or does not pay one, it can be seen as a negative signal to investors, indicating that the firm is struggling financially or does not have enough cash reserves to pay a dividend. Therefore, option C is the best choice.

When a Firm ________ Its Dividend,it Sends a ________ Signal

When a Firm Its Dividend,it Sends a Signal