1. Dividend policy Afirm's value depends on its expected free cash flow and its cost of capital Distributions made in the form of dividends or stock repurchases impact the firm's value and the investors in different ways. In some cases, analysts notice that groups of similar investors tend to flock to stocks that have dividend policies consistent with their financial needs. This circumstance is an illustration of: the residual dividend policy. dividend irrelevance theory. the signaling hypothesis. the clientele effect. Consider the case of Purple Sage Producers Inc., and answer the question that follows: Purple Sage Producers Inc. is an duilling company. The company and a dividend of $1.50 last year, and in the past, its dividend has increased steadily by about 4% a year. Purple Sage just announced that is dividend will increase to $2.10 this year, and its share price rose from 12 per share to $30 per share immediately after the announcement Consider the case of Purple Sage Producers Inc., and answer the question that follows: Purple Sage Producers Inc. is an oil-drilling company. The company paid a dividend of $1.50 last year, and, in the past, its dividend has increased steadily by about 4% a year. Purple Sage just announced that its dividend will increase to $2.10 this year, and its share price rose from $28 per share to $30 per share immediately after the announcement. Which of the following best explains why Purple Sage's stock price increased as it did? The clientele effect Dividend irrelevance theory The signaling hypothesis Which of the following statements is true? Taxes on dividend income are paid when the stock is sold. Taxes on dividend income are paid in the year that they are received. As a result, the U.S. tax code encourages many individual investors to prefer to receive