1. Dividend policy

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 $2.80 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 $3.75 this year, and its share price rose from $35 per share to $38 per share Immediately after the announcement Which of the following best explains why Purple Sage's stock price increased as it did? increased Dividend irrelevance theory The dientele effect The signaling hypothesis Which of the following statements is true? Taxes on dividend income are paid in the year that they are received Taxes on dividend Income are bald when the stock is sold The signaling hypothesis Which of the following statements is true? Taxes on dividend income are paid in the year that they are received. Taxes on dividend income are paid when the stock is told. As a result, the u.s. tax code encourages many individual investors to prefer to receive capital gains Some researchers and analysts have noticed a trend in which firms that increase their dividends so an increase in their stock price. The theory of explains this phenomenon. In some cases, analysts notice that groups of similar investors tend to flock to stocks that have dividend polides consistent with their needs. This circumstance is an illustration of O the information content effect. the clientele effect