Question: Suppose a firm announces a new dividend amount every year
Suppose a firm announces a new dividend amount every year with the first quarterly dividend declaration, but never explicitly states that the dividend will be continued for the other three quarters of the year. However, in the past the firm has always continued the first quarter’s dividend into the other three quarters of the year. How much would you expect this firm’s share price to react when it announced the new, first-quarter dividend at the beginning of a new year?
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