Question

true or false . I GIVE THUMBS UP

2.

An example of the existence of an information content effect of dividends is when IBM's share price rises upon the announcement of unexpectedly high earning.

3.

Automatic dividend reinvestment plans help make corporate dividend policies irrelevant to individual stockholders.

4.

Having a high percentage of tax-exempt institutional stockholders is a factor that favor a high dividend policy.

6.

An investor in a relatively high personal income tax bracket would likely prefer a firm with a high dividend payout rate.

7.

An example of the existence of an information content effect of dividends is when GM's share price falls on the same day the firm announces a stock dividend.

Answer 1

2. The answer is True- This is true because when company announce high profit when there is increase in company's profit then there are high chance that company will pay high dividend.Share price will rise which will give high dividend to the shareholder.

3. The answer is True-this statement is true because when individual dividend is reinvested automatically then the corporate dividend policy is cannot be used as funds are redirected automatically by the individuals.

4. the answer is true- when dividend is tax exempted then the stockholder want more dividend as return and will favour high dividend policy

6. The answer is False- An investor in a relatively high personal income tax bracket would likely prefer a firm with a low dividend payout rate. As high dividend payout means company will pay high dividend and same will be taxable in income tax.

7. the answer is true- as every change in share price has direct impact on dividend.