The Passive Residual Dividend Policy Asserts That ____

question 4

Multiple Choice

The passive residual dividend policy asserts that ____.

• A) dividends should be paid out only if the firm does not have enough acceptable investment projects to utilize all earnings internally
• B) dividends should be paid only when the firm has ready access to new equity markets
• C) retained earnings, being the residual earnings of the firm, should always be paid out to existing stockholders
• D) investment policy and dividend policy decisions should always be made independently

---

Definitions:

Population Parameter

A numerical characteristic or measure of an entire population, such as a mean (average), variance, or proportion.

Relative Efficiency

A measure comparing the precision or performance of two statistical estimators or methods.

Unbiased

An attribute of an estimator in statistics that means the expected value of the estimator equals the true parameter value it estimates.

Consistent

Referring to an attribute or behavior that is reliable and uniform over time, showing little to no variation.