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.

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Definitions:

Offer Of Performance

Offer of performance, in legal terms, is when a party involved in a contract demonstrates readiness and willingness to fulfill their obligations under the contract.

Conditional Contracts

Contracts that require certain conditions to be met before they can be fully enforceable or before an obligation to perform arises.

Equity Theory

A theory of motivation that posits individuals assess their job satisfaction and motivation based on their perception of fairness in the exchange of inputs and outcomes in their employment.

Comparison Person

An individual used as a reference point in social comparison processes, influencing one's self-evaluation, feelings, and behaviors.