Reference no: EM131508744

Red Dirt Producers Inc. is an oil drilling company. The company paid a dividend of $1.50 last year, and , in the past its dividend has increase steadily by about 4% a year. Red Dirt just announced that its dividend will increase to $2.10 this year, and its share price rose from $28 per share to $30 per share immediately after the announcement Which of the following best explains why Red Dirts's stock price increase as it did? A. Dividend irrelevance theory B. the clientele effect C. The signaling hypothesis Which of the following statements is true A. taxes on dividend income are paid when the stock is sold B Taxes on dividend income are paid in the year that they are received As a result, The U.S tax code encourages many individual investors to prefer to receive A. capital gains B. dividends Another firm, called lootem power & water, an establishment public utility company, has bee paying dividends for the past 20 years. This year lootem also announced that it will increase its dividends by 10%. Which class of investors is more likely to be pleased by Lootem's dividend announcement? A. Investors with high tax rate who don't depend on current dividend income for living expense B. Investors with low taxes rate who depend on current dividend income for living expenses A firm's______ dividend policy determines its current clientele of investors A. Past B. Fututre