Asked by
rebeca Clarida
on Nov 07, 2024Verified
A policy under which the firm pays dividends only after its capital investment needs are met, and while maintaining a constant debt/equity ratio, is called a __________________.
A) Homemade dividend.
B) Clientele effect.
C) Residual dividend approach.
D) Bird-in-the-hand approach.
E) Constant dividend growth model.
Residual Dividend Approach
A method where the firm pays dividends from the residual or leftover equity after paying for all capital expenditures and working capital needs.
Debt/Equity Ratio
A financial ratio that measures the relative proportion of shareholders’ equity and debt used to finance a company’s assets.
Capital Investment
Funds invested in a firm or enterprise for the purpose of furthering its business objectives, including acquiring assets and launching new ventures.
- Recognize and explain the key factors influencing dividend policy decisions within companies.
Verified Answer
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Learning Objectives
- Recognize and explain the key factors influencing dividend policy decisions within companies.