If a Firm Adheres Strictly to the Residual Dividend Policy,what

question 7

Multiple Choice

If a firm adheres strictly to the residual dividend policy,what would the issuance of new common stock suggest?

• A)The dividend payout ratio has remained constant.
• B)The dividend payout ratio is increasing.
• C)No dividends were paid during the year.
• D)The dividend payout ratio is decreasing.

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Definitions:

Tool

An instrument or mechanism that can be used to produce or achieve something, often implying utilization for a specific function or task.

Referent

The object or thing that a word or phrase denotes or stands for.

This Glass of Pepsi

A specific instance of a beverage, served in a glass, that is being referred to in the context.

Beverage

A liquid intended for human consumption to fulfill thirst and sometimes to provide nutrition or pleasure.