Assume that a firm has a steady record of paying high dividends for years. A new management
team decided to cut the current year's dividend in half without disclosing why.
The market value of
the stock fell 35% on the day the dividend cut was announced. Which of the following would best
explain the stock market's reaction to the announcement?
A) residual dividend theory B) information effect
C) empirical theory D) dividend irrelevance theory
B
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Which of the following statements regarding an individual disability income policy's rehabilitation benefit is CORRECT?
A) The rider helps pay the cost of at-home medical equipment for a disabled insured. B) The rider helps pay nursing home costs for a severely disabled insured. C) The rider helps pay the cost of rehabilitation treatment for alcohol and drug abuse. D) The rider helps pay the cost of therapy and retraining.
Generally speaking, an effective proposal can
A) follow the AIDA model. B) follow the plan for good-news messages. C) avoid the "you" attitude. D) be as vague as possible. E) rely entirely on primary evidence.