1. Dividend policy Vick Shipping paid a dividend of $1.50 last year, and its div

Question

1. Dividend policy Vick Shipping paid a dividend of $1.50 last year, and its dividend has increased steadily by about 4% a year. Vick Just announced that its dividend will increase to $2.10 this year, and its stock price rose from $26 to $28 immediately after the announcement. Which of the following best explains why the price increased as it did? M-M dividend irrelevance The signaling hypothesis The residual dividend model The clientele effect Which class of investors is more likely to be pleased by Vick's dividend announcement? Investors with low tax rates who depend on current dividend income for living expenses Investors with high tax rates who don?t depend on current dividend income for living expenses

Explanation / Answer

Investors get attracted to invest in the stock of those companies which change policies according to their preferences and investment objectives. This change in policies of company increases the demand of the stock in the market and in result the price of stock increases. This effect is known as

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.