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What Hypotheses Can I Use To Explain This Phenomenon?
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It has been found empirically, that on average the total market value of their stock rises when firms announce a dividend. What hypotheses might you offer to explain this phenomenon?
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one is that people buy in order to get the divident - until it goes ex-d.
second that a divi shows the firm is in good health
so the confidence bit of the share price rises
this presupposes you subscribe to the view that confidence contributes to the share price
BUT
this is obviously a question based on this weeks reading, so read it all again and see if you cant spot the answer in the script
one is that people buy in order to get the divident - until it goes ex-d.
second that a divi shows the firm is in good health
so the confidence bit of the share price rises
this presupposes you subscribe to the view that confidence contributes to the share price
BUT
this is obviously a question based on this weeks reading, so read it all again and see if you cant spot the answer in the script
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