The passive residual dividend policy asserts that ____.
A) dividends should be paid out only if the firm does not have enough acceptable investment projects to utilize all earnings internally
B) dividends should be paid only when the firm has ready access to new equity markets
C) retained earnings, being the residual earnings of the firm, should always be paid out to existing stockholders
D) investment policy and dividend policy decisions should always be made independently

Question

Quizplus · Accepted Answer

The passive residual dividend policy asserts that dividends should be paid out only if the firm does not have enough acceptable investment projects to utilize all earnings internally, meaning that retained earnings should be the residual earnings that are not needed for productive investment opportunities.

The Passive Residual Dividend Policy Asserts That ____