The Problem with a Constant-Pay-Out-Ratio Dividend Policy from the Shareholder's

question 78

Multiple Choice

The problem with a constant-pay-out-ratio dividend policy from the shareholder's perspective is that

• A) even when earnings are low, the company must pay a fixed dividend.
• B) there is no informational content.
• C) it bores the shareholders.
• D) if the firm's earnings drop, so does the dividend payment.

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Definitions:

Diagnose

The process of identifying the nature of a problem, issue, or situation through analysis of its symptoms or characteristics.

Appropriate Action

refers to behavior or decisions that are suitable or fitting for a particular situation, context, or set of circumstances.

Qualitative Research

A research method focused on understanding concepts, thoughts, or experiences through analysis of textual, visual, or auditory data, rather than numerical.

Quantitative Research

Research that collects and analyzes numerical data to understand patterns, relationships, or trends.