Many firms try to maintain a stable dividend policy ____.
A) because of the informational content of dividend changes
B) in order to satisfy investors who rely on dividends as a primary source of income
C) in order to remain as eligible investments for many financial institutions
D) All of these are correct

Question

Quizplus · Accepted Answer

All of these reasons are valid motivations for firms to maintain a stable dividend policy. Dividend changes can signal changes in the firm's financial position, and investors who rely on dividends for income may avoid stocks with volatile dividend payouts. Additionally, financial institutions may have specific criteria for investing in stocks that meet certain dividend stability requirements.

Many Firms Try to Maintain a Stable Dividend Policy ____