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.
Answer:B
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.