The greater a firm's dividend payout, the ________ likely it is that the stock's price will rise above the exercise price.

Question

Quizplus · Accepted Answer

A higher dividend payout means the firm is distributing more of its profits to shareholders, which leaves fewer funds for investing in growth opportunities or keeping cash reserves. As a result, the stock's future growth potential may be lower, which could limit the likelihood of the stock's price rising above the exercise price.

The Greater a Firm's Dividend Payout, the ________ Likely It