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26 Which of the following statements is FALSE with regards to dividends/dividend payout? Select one: O a. When managers cut the dividend, it may signal
26 Which of the following statements is FALSE with regards to dividends/dividend payout? Select one: O a. When managers cut the dividend, it may signal that they have given up hope that earnings will rebound in the near term and need to reduce the dividend to save cash. O b. Firms adjust dividends relatively infrequently, and dividends are much less volatile than earnings. This practice of maintaining relatively constant dividends is called dividend signaling. Share repurchases are a credible signal that the shares are under-priced, because if they are over-priced a share repurchase is costly for current shareholders. Od. The average size of the stock price reaction increases with the magnitude of the dividend change, and is larger for dividend cuts. O e. While an increase of a firm's dividend may signal management's optimism regarding its future cash flows, it might also signal a lack of investment opportunities. Ot. The typical motivation for a stock split is to keep the share price in a range thought to be attractive to small investors, O g. When a firm increases its dividend, it sends a positive signal to investors that management expects to be able to afford the higher dividend for the foreseeable future
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