The share price falls when a dividend is paid because the reduction in cash decreases the ________.
A) liabilities of the firm
B) current account of the firm
C) market value of assets
D) equity of the firm

Question

Quizplus · Accepted Answer

When a dividend is paid, the cash outflow reduces the company's assets, specifically its cash reserves, which in turn decreases the market value of the firm's assets.

The Share Price Falls When a Dividend Is Paid Because