Dividends Are Likely to Shift Up and Down as Earnings

question 24

True/False

Dividends are likely to shift up and down as earnings fluctuate so that managers can maintain a stable payout ratio.

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Definitions:

Price Elastic

Describing a situation where the demand for a product is sensitive to price changes, meaning a relatively small change in price leads to a large change in the quantity demanded.

Supply Curve

A graph that details the interaction between the price level of a commodity and the quantity of it provided.

Per-unit Tax

A tax imposed on each unit of a good or service sold, affecting the supply curve by increasing production costs.

Tax Burden

The total amount of tax levied on an individual, corporation, or other entity, often expressed as a proportion of income or economic output.