Question

JBC Corp. declared a dividend of $2 per share, which was an increase of 25% from the prior year, yet JBC Corp. stock declined by 3% the day of the announcement. RBG Corp. declared a dividend of $2 per share, which was the same as the prior year, and its stock increased in value by 2% on the day of the announcement. These events could be most readily explained by the

Answer 1

Answer:

Expectations theory

Explanation:

From the fundamental analyst perspective; Expectation theory presumably focuses on predicting what short-term interest rates  will eventually results to over the course of time in the future based on current long-term interest rates.

Expectation theory describes that an investor who buys instruments accumulate the equal amount of interest by investing into two consecutive one-year bond investments versus investing in one two-year bond today.