Types of Dividends: Finessed Finance Co

question 34

Multiple Choice

Types of dividends: Finessed Finance Co. has a policy of returning a minimum of 25 per cent of earnings to shareholders every year through dividend issues and on-market share buy-backs. In each quarter this year, the company earned $0.20 per share. In each of the first three quarters, the company paid a regular cash dividend of $0.05 per share. What combination of dividends could the company's board approve to meet their target payout percentage?

• A) A regular cash dividend of $0.05
• B) A regular cash dividend of $0.05 per share and a special dividend of $0.25 per share
• C) A regular cash dividend of $0.05 per share and a special dividend of $0.10 per share
• D) A regular cash dividend of $0.05 per share and a special dividend of $0.20 per share