The PetroTracking and Extraction Ltd

question 27

Multiple Choice

The PetroTracking and Extraction Ltd.'s, a Calgary-based company, is experiencing double-digit growth in earnings. Given that its Board of Directors has adopted a traditional view of dividend policy, what should the company's dividend policy be?

• A) Retain its earnings to provide shareholders with immediate capital gains.
• B) Retain its earnings, to be used for immediate investment, to provide shareholders with greater future earnings.
• C) Target a 15% dividend payout ratio to balance the conflicting needs of shareholders who want capital gains with those who want immediate income.
• D) Target a maximum dividend payout to provide shareholders with cash now instead of in the future.
• E) Decide on dividend levels in each period based primarily on the dividend policies of competing companies.

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