In the real world, we find that dividends
A) Usually exhibit greater stability than earnings.
B) Fluctuate more widely than earnings.
C) Tend to be a lower percentage of earnings for mature firms.
D) Are usually changed every year to reflect earnings changes.
E) Are usually set as a fixed percentage of earnings.

Question

Quizplus · Accepted Answer

Dividends usually exhibit greater stability than earnings because companies tend to smooth dividends over time, maintaining consistent payouts even when earnings fluctuate.

In the Real World, We Find That Dividends