1. The theory that investors regard dividend changes as signals of management's earnings forecasts is called the _____.
a. information content hypothesis
b. stock splits theory
c. capital structure effect
d. weighted average hypothesis
e. residual earnings policy
2. Dividend payments cannot exceed the balance sheet item "Retained earnings." This is known as the _____.
a. ?stock split rule
b. ?impairment of capital rule
c. ?dividend irrelevance rule
d. ?constant payout rule
e. ?free cash flow rule