Dividends Are Relevant and Dividend Policy Irrelevant When

question 2

Multiple Choice

Dividends are relevant and dividend policy irrelevant when:

• A) cash dividends are always constant and dividend policy is changed as management needs.
• B) cash dividends are increased for one year while others are held constant, thus causing an increase in stock price, and dividend policy establishes the trade-off between dividends at different dates.
• C) cash dividends are always constant and dividend policy establishes the trade-off between dividends at different dates.
• D) cash dividends are increased for one payment while others are held constant and dividend policy is changed as management needs.
• E) None of these.

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