Question

The information content of a dividend increase generally signals that:_________ a) the payer has few, if any, net present value projects to pursue. b) the payer has more cash than it needs due to a decline in future orders. c) management believes earnings growth will be strong going forward.

Answer 1

Answer:Option C

Explanation:

Dividend means the portion of profit which the company plans to distribute it to the shareholders of the company. When there is a dividend increase it signals that the company will have future positive results. The dividend increase is a forecast of the company's future profitability.

The shareholders will also know that company will have positive performance in the future. The information is useful for the investors as this also indicate a positive cash flow in the company's financial statements.