A Firm That Maintains a "Stable Dollar Dividend Per Share

question 118

Multiple Choice

A firm that maintains a "stable dollar dividend per share" will generally not increase the dividend unless

• A) a stock split occurs.
• B) the firm merges with another profitable firm.
• C) the firm is sure that a higher dividend level can be maintained.
• D) the P/E ratio has increased steadily over the past 5 years.

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Definitions:

Common Fixed Expenses

Costs that do not vary with the level of production or sales, shared across different segments or products of a business.

Break-Even

The point at which total costs equal total revenues, meaning there is no profit or loss.

Sales Dollars

The total revenue generated from the sale of goods and services within a specific period.

Common Fixed Expenses

These are fixed costs that are not directly tied to production levels, such as salaries, rent, and insurance, which are shared across different segments of a business.