Which of the following statements is most plausible?
A) Increases in stock price associated with a dividend increase are likely due to information conveyed by the increase.
B) Increases in stock price associated with a dividend increase are likely due to changes in the company's capital structure.
C) Increases in stock price associated with a dividend increase are likely due to investors' preference for dividends over capital gains.
D) Increases in stock price associated with a dividend increase are likely due to the favorable tax treatment of dividends over capital gains.

Question

Quizplus · Accepted Answer

It is most plausible that stock price increases associated with a dividend increase are due to the information conveyed by the increase. This information may signal to investors that the company is performing well, financially stable, and has a positive outlook for the future. This can lead to increased investor confidence and demand for the stock, resulting in a higher stock price. The other options are less plausible as they do not fully capture the complexity of factors that contribute to stock price movements.

Which of the Following Statements Is Most Plausible