8 Which of the following is incorrect regarding payout decision and signals generated from it? a. A firm that chooses a high-dividend policy without the cash flow to back it up wi find that it ultimately has to either cut back on investments or turn to capital markets for additional debt or equity financing. Because this is costly. managers do not increase dividends unless they are confident that the firm is generating enough cash to pay them. This is the principal reason that we say that there is an information content of dividends-that is dividend changes are liable to be interpreted as signals of a change in the firm's prospects b. Investors also seem to welcome the announcement that a company plans to repurchase its stock. If they are worried that the company has more cash than it can profitably employ, they may be pleased to see the cash given back to the shareholders. A) a B) b C) Both a and b D) Neither a nor b is incorrect