Good Signal Co. is currently trading for $10 with 1 million shares outstanding. Which of the following actions would be the most credible signal that management believes that the long-term prospects for a company has improved?

Question

Quizplus · Accepted Answer

Increasing the regular quarterly dividend from $0.20 to $0.40 would signal management's confidence in the company's long-term prospects, as it would commit the company to a higher dividend payout in the future. A one-time extra dividend (option A) may not necessarily indicate a long-term improvement in prospects, and stock repurchases (options C and D) can be interpreted in multiple ways and do not necessarily signal management's confidence in the company's future.