Managers Have Been Characterized as Reluctant to Increase Dividends If

question 70

Multiple Choice

Managers have been characterized as reluctant to increase dividends if:

• A) dividends were increased in the preceding year.
• B) earnings have permanently increased.
• C) the dividend increase cannot be sustained.
• D) the dividend payout ratio exceeds 20%.

---

Definitions:

Price-inelastic

Price-inelastic describes a situation where the demand for a product or service is relatively unresponsive to changes in its price.

Linear Demand Curve

A graphical representation showing a straight-line relationship between the quantity demanded of a good and its price.

Price Elasticity

A measure of the sensitivity of demand for a product in response to a change in its price.

Perfectly Elastic Demand

The case in which any price increase will cause the quantity demanded to drop to zero; the demand curve is a horizontal line.