15. Ignoring taxes and all else held constant, the market value of a stock shoul
ID: 2804953 • Letter: 1
Question
15. Ignoring taxes and all else held constant, the market value of a stock should decrease by the amount of the dividend on the A. dividend declaration date. B ex-dividend date. C.date of record. D. date of payment E day after the date of payment. 16. The information content of a dividend increase generally signals that: A. the firm has a one-time surplus of cash. B. the firm has several net present value projects to pursue C. management believes the future earnings of the firm will be strong. D. the firm has more cash than it needs due to sales declines. E. future dividends will be lower. 17. The hypothesis that market prices reflect all publicly available information is called form A. open efficiency B. strong C. semistrong D. E. weak stable 18. Insider trading does not offer any advantages if the financial markets are: A. weak form efficient B. semiweak form efficient C. semistrong form efficient. D. strong form efficient E stable form efficient inefficient . According to theory, studying historical prices in order to identify mispriced stocks will: A. B. C. only work if the market is at least weak form efficient. work as long as the market is strong form efficient. work only in a semi-strong form efficient market. not work if the market is at least weak form efficient. Comparing two otherwise equivalent firms, the beta of the common stock of a levered firm is ot work in any market regardless of the level of efficiency 20. the beta of the common stock of an unlevered firm A, roughly equivalent to B. significantly less C slightly less D. greater than E. equal to 41Page #1349Explanation / Answer
15. The answer is option “B” – ex-dividend date.
On the ex-dividend date, the exchange reduces the stock price by the amount of the dividend to account for the fact that new investors are not eligible to receive dividends and are therefore unwilling to pay a premium.
16. The answer is option “C” – management believes that future earnings of the firm will be strong.
Dividend is distribution of a company’s earnings and its increase is a signal of good momentum and earnings visibility.
17. The answer is option “C” – semi strong.
Strong form occurs when public as well as private information is reflected.
18. The answer is option “D” – strong form efficient. This is because in such a form even the private information (besides the publicly available information) is reflected.
19. The answer is option “D” – not work in any market regardless of the level of efficiency.
This is because this method is ineffective even when the market is only weak form efficiecnt.
20. The answer is option “D” – greater than.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.