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Consider the case of Green Mountain Producers Inc., and answer the question that follows: Green Mountain Producers tnc. is an oil-dniling company. The company paid a dividend of 52.20 last year, and, in the past, its dividend has increased steadily by about 4% a year Green Mountain fust announced that its dividend will increase to $2.90 this year, and its share price rose from $33 per share to $35 per share immediately after the announcement. Which of the following best explains why Green Mountain's stock price increased as it did? The signaling hypothesis The clientele effect Dividend irrelevance theory Which of the following stotements is true? Taxes on dividend income are paid in the year that they are received. Taxes on dividend income are paid when the stock is sold As a result, the U.S, tax code encourages many individual investors to prefer to recelve Some researchers and analysts have noticed a trend in which firms that increase their dividends see an increase in their stock price. The theory of explains this phenomenon. In some cases, analysts notice that groups of similar investors tend to flock to stocks that have dividend policies consistent with their needs. This circumstance is an illustration of: the information content effect. the clientele effect

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