Announcements of dividend increases:

generally have no effect on stock prices

generally causes stock prices to go down, as investors prefer capital gains to dividends

are a signal that the firm has gone from a growth stage to a mature stage; consequently, stock prices generally decline

generally cause stock prices to go up, as increases in dividends are viewed as a signal about expectations of future earnings

The P/E ratio is a multiple of earnings that investors pay for a stock.The P/E is _____related to growth and_____ related to the discount rate.

positively; negatively

negatively; negatively

negatively; positively

positively; positively