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The increase in the stock price after a dividend increase is called the information effect if: The change in the dividend was expected by shareholders.

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The increase in the stock price after a dividend increase is called the information effect if: The change in the dividend was expected by shareholders. The dividend increase signaled to investors to adjust up their expectations of future earnings and dividends. The dividend change signaled to investors to adjust the risk of the firm downward. The dividend change signaled to investors that the firm could now have higher dividend payouts as it entered the mature phase of its business. None of the above

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