Assume that satisfied clienteles exist.Given this assumption, which one of these statements is correct?
A)A firm can increase its share price by increasing its dividend payout.
B)Dividend policy is irrelevant as long as each clientele group remains satisfied.
C)All firms will adopt a high-dividend-payout policy.
D)All dividends become irrelevant.
E)All firms should adopt a low-dividend-payout policy.

Question

Quizplus · Accepted Answer

When clienteles are satisfied, dividend policy becomes irrelevant because investors have already sorted themselves into firms that match their dividend preferences.

Assume That Satisfied Clienteles Exist