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

Question

Quizplus · Accepted Answer

This statement suggests that the increase in share price is due to the information conveyed by the dividend increase. This could be an indication of a positive outlook on the company's future prospects, leading investors to bid up the share price. Options B, C, and D do not fully explain why dividend increases lead to increased share prices.

Which of the Following Statements Is Most Plausible