Dew Drop In, Inc. announces is quarterly dividend will increase from $3.80 to $4

Question

Dew Drop In, Inc. announces is quarterly dividend will increase from $3.80 to $4.00. After the announcement, the price of Dew Drop In, Inc.'s stock drops. The most likely explanation is that (Points : 2)        the stock market is a perfect market.
       investors are irrational.
       investors were expecting a larger increase.
       Dew Drop In, Inc.'s debt ratio decreased. Dew Drop In, Inc. announces is quarterly dividend will increase from $3.80 to $4.00. After the announcement, the price of Dew Drop In, Inc.'s stock drops. The most likely explanation is that (Points : 2)        the stock market is a perfect market.
       investors are irrational.
       investors were expecting a larger increase.
       Dew Drop In, Inc.'s debt ratio decreased.

Explanation / Answer

Correct option is investors were expecting a larger increase.

when company does not met investor expectations share price will decrease. Hence, this is correct option.

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