The Problem with the Constant Dividend Payout Ratio Is

question 170

Multiple Choice

The problem with the constant dividend payout ratio is

• A) investors may come to expect a specified amount.
• B) the dollar amount of the dividend fluctuates from year to year.
• C) management is reluctant to cut the dividend even if there are low profits that year.
• D) management cannot decrease the dividend when times are tough.

---

Definitions:

Productivity Variables

The three factors critical to productivity improvement—labour, capital, and management.

Labour

The human effort, whether physical or mental, contributed towards the production of goods or services in an economy.

Capital

Financial assets or resources that individuals or organizations use to fund their operations and invest in their businesses.