Which one of the following signals is most likely to elicit a decrease in share price?
A) A repurchase of 5% of the firm's stock
B) An increase in the regular quarterly dividend
C) A decrease in the regular quarterly dividend
D) Borrowing funds in order to pay a cash dividend

Question

Quizplus · Accepted Answer

A decrease in the regular quarterly dividend signals to investors that the company may be experiencing financial difficulties or may not have enough cash to maintain the previous dividend payout. This can lead to a decrease in investor confidence and a subsequent decrease in share price.

Which One of the Following Signals Is Most Likely to Elicit