The ability of shareholders to undo the dividend policy of the ﬁrm and create an alternative dividend payment policy via reinvesting dividends or selling shares of stock is called:

Question

Quizplus · Accepted Answer

The ability of shareholders to reinvest dividends or sell their shares in order to create their own dividend policy is known as Homemade dividend policy. This concept suggests that if a company's dividend policy doesn't align with an individual investor's personal preferences, they can create their own personalized dividend policy by either reinvesting their dividends or selling shares. Therefore, the correct answer is E.

The Ability of Shareholders to Undo the Dividend Policy of the ﬁRm