Which of the following is TRUE of a dividend payout?
A)When a firm announces that it will increase its dividend,the share price usually decreases on that news.
B)Dividend payments send a positive signal to investors in the marketplace that management believes that the stock is overvalued.
C)When a stock begins to trade ex dividend the share price will fall.
D)When a stock begins to trade ex dividend there is no impact on the share price if the market.is efficient

Question

Quizplus · Accepted Answer

When a stock begins to trade ex dividend, the share price will generally fall by the amount of the dividend because the buyer of the stock will not be entitled to receive the upcoming dividend payment. This is known as the ex-dividend effect.

Which of the Following Is TRUE of a Dividend Payout