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When a firm begins to pay dividends, what does the market think? It depends on conditions in the market The stock generally rises because a
- When a firm begins to pay dividends, what does the market think?
- It depends on conditions in the market
- The stock generally rises because a dividend payout provides credible evidence that the firm is doing well enough to distribute its excess cash to its shareholders.
- The stock generally declines because it suggests that the firm cannot invest it funds for higher returns within the company itself.
- The stock generally rises because mutual funds take greater interest in stocks that pay dividends.
- The stock generally declines because dividends may lead to dilution.
- Which of the following is not true regarding share repurchases?
- Share repurchases are, in effect, a form of dividend payout to existing shareholders, because they lead to an increase in the stock's overall yield.
- Share repurchases almost always lead to a higher stock price because it is anti-dilutive.
- Share repurchases are less effective when the repurchase is undertaken as the stock hits new highs.
- Share repurchases are one of five things that can be done with excess corporate cash.
- Share repurchases are an indication that the company is defending against a buyout.
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