Question: 1-The idea that dividend changes reflect managers' views about a firm's future earnings prospects is called the ________ hypothesis. 2-Consider the following equation: C =

1-The idea that dividend changes reflect managers' views about a firm's future earnings prospects is called the ________ hypothesis.

2-Consider the following equation: C = P + S - PV(K) - PV(Div)

In this equation, what does the term K represent?

A)the strike priceof the option

B)the price of a zero-coupon bond

C) the value of the call option

D) the stocks current price

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