If a Firm Follows a Stable Dividend Policy While Its

question 105

Multiple Choice

If a firm follows a stable dividend policy while its earnings are growing and no new stock has been issued, what would happen to the firm's dividend payout ratio over time?

• A)The payout ratio will decrease.
• B)The payout ratio will increase.
• C)The payout ratio will decrease initially and then increase.
• D)The payout ratio will remain stable and not change.

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Definitions:

Populist Party

A political party or movement that claims to represent the common people, often against the elite or establishment, with platforms usually focusing on issues affecting the average citizen.

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A 19th-century American writer known for his novels depicting young boys' ascension from poverty to middle-class respectability through hard work and virtue.

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Beneficial relationships or networks that an individual or organization has, which can be leveraged for personal or professional advantage.

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Exerting significant effort or diligence in completing tasks or achieving goals.