Question
As part of an unexpected news announcement, Alpha Co. stated that it is increasing its annual dividend from $1.04 per share to $1.10 per share.
As part of an unexpected news announcement, Alpha Co. stated that it is increasing its annual dividend from $1.04 per share to $1.10 per share. What else must the company have also announced if its stock price and total expected return remained constant following this announcement? Assume none of the announcement information was previously expected by the market.
Select one:
a. The firm will continue to pays it dividend on an annual basis.
b. The firm is planning a new period of rapid growth.
c. The firm's ongoing operations are on track to meet prior expectations.
d. The firm's rate of growth will be less than previously anticipated.
e. The firm's dividend payout ratio has been, is, and will continue to be constant.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started