Question

1. Company XYZ is expecting a large increase in​ earnings, beginning next​ quarter, because a new production method that it developed is much more efficient than it had expected. If the company announces a big increase in its​ dividend, then the stock price is most likely to​ _____________________ on the day it announces the new dividend.

Which answer best fills in the blank​ above?

A. increase

B. stay the same

C. decrease

D. All of these choices are equally likely

2. Company XYZ is expecting a large increase in​ earnings, beginning next​ quarter, because a new production method that it developed is much more efficient than it had expected. If the company announces a big increase in its​ dividend, then the stock price is most likely to​ _____________________ on the​ ex-dividend day.

Which answer best fills in the blank​ above?

A. stay the same

B.decrease

C. increase

D. All of these choices are equally likely

Answer 1

Before the dividends distributed, the issing company must declare the dividend amonut and the date when it will be paid.it also announces the last date when shares can be purchased to the dividend callced the ex- dividend date.

the declaration of the dividend is encourages the share holders to buy the stock,so stock price increses normally.

1 ) Here Declared dividend is a big increses in its dividend then the stock price most likely to increses on the dayit announce the new dividend

option a is correct.

After the stock goes ex-dividend date, the share price is drop normally by the amonut the dividend amount.

2 ) option b is correct