The Problem with the Residual Dividend Policy Ratio Is

question 127

Multiple Choice

The problem with the residual dividend policy ratio is

• A) investors might 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 in a year.
• D) all of the above are possible problems.

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Definitions:

Binomial Distribution

A probability distribution that summarizes the likelihood that a value will take one of two independent states under a given number of trials.

Sampling Distribution

Sampling Distribution is the probability distribution of a given statistic based on a random sample, used to make inferences about a population.

Sample Proportion

The ratio of members in a sample exhibiting a certain trait to the total number of members in the sample.

Central Limit Theorem

A principle stating that the distribution of sample means approaches a normal distribution as the sample size becomes larger, regardless of the population's distribution.