2022 CFA Level II Exam: CFA Exam Practice Question

CFA Exams
CFA Level I Exam
Study Session 7. Corporate Finance (1)
Reading 21. Analysis of Dividends and Share Repurchases
Subject 1. Dividend policy and company value: theory

CFA Practice Question

There are 151 practice questions for this study session.

CFA Practice Question

Which of the following is based on the argument that stocks attract particular groups based on dividend yield?

A. clientele effect

B. dividend irrelevance proposition

C. dividend signaling effect

User Contributed Comments 1

User	Comment
Rotigga	Clientele Effect: The theory that a company's stock price will move according to the demands and goals of investors in reaction to a tax, dividend or other policy change affecting the company. The clientele effect assumes that investors are attracted to different company policies, and that when a company's policy changes, investors will adjust their stock holdings accordingly. As a result of this adjustment, the stock price will move. (From Investopedia)

User

Comment

Rotigga

Clientele Effect: The theory that a company's stock price will move according to the demands and goals of investors in reaction to a tax, dividend or other policy change affecting the company. The clientele effect assumes that investors are attracted to different company policies, and that when a company's policy changes, investors will adjust their stock holdings accordingly. As a result of this adjustment, the stock price will move. (From Investopedia)

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