Question

Bayside Marina just announced it is decreasing its annual dividend from $1.48 per share to $1.45 per share effective immediately. If the dividend yield remains at its pre-announcement level, then you know the stock price: Select one: a. was unaffected by the announcement. b. increased proportionately with the dividend decrease. c. decreased proportionately with the dividend decrease. d. decreased by $.03 per share. e. increased by $.03 per share.

Answer 1

Answer:

C. decreased proportionately with the dividend decrease

Explanation:

From the question, we are informed about how Bayside Marina just announced it is decreasing its annual dividend from $1.48 per share to $1.45 per share effective immediately. In the case the dividend yield remains at its pre-announcement level, then the stock price decreased proportionately with the dividend decrease. Stock price can be explained as the the price in which share of stock is currently trade in the market. It allows to know the current value of a firm as well as it's market value. It should be noted that the stick price decreased proportionately with the dividend decrease. Any fall in the stock price will affect the dividend and bring fall too.