Exam 13: Dividend Policy and Internal Financing

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AFB,Inc.and DAS,Inc.both paid a $2 per share dividend last year.This year,AFB,Inc.announces an increase to $3 per share while DAS,Inc.announces an increase to $2.50 per share.After the announcement,the price of DAS,Inc.stock increases and the price of AFB,Inc.'s stock decreases.Which of the following best explains this situation?

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The "bird-in-the-hand dividend theory" supports which view of the effect of dividend policy on company value?

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When considering taxes,most investors prefer capital gains over dividend income.

(True/False)
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According to the perfect markets approach to dividend policy

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