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:

Standard Deviation

A measure that quantifies the amount of variation or dispersion of a set of data points relative to their mean.

PHStat

An Excel-based software utility that performs statistical analysis, designed as an add-in for Microsoft Excel.

Covariance

A measure indicating the direction of the linear relationship between two variables, whether they tend to move together or in opposite directions.

Two Assets

Refers to any two types of financial instruments or resources owned by individuals or businesses, such as stocks, bonds, or real estate properties.