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.

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Definitions:

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