The Problem with a Constant-Payout-Ratio Dividend Policy from the Shareholder's

question 33

Multiple Choice

The problem with a constant-payout-ratio dividend policy from the shareholder's perspective is that

• A) it bores the shareholders.
• B) if the firm's earnings drop, so does the dividend payment.
• C) even when earnings are low, the company must pay a fixed dividend.
• D) there is no informational content.