The _____________ Policy States That Dividends Will Vary Based Upon

The _____________ policy states that dividends will vary based upon how much excess funds the firm has from year-to-year, whereas under a ________________ policy the firm pays a constant percentage of earnings as dividends, so as earnings rise and fall so does the dollar amount of dividends.

A) constant payout ratio, residual dividend
B) residual dividend, constant payout ratio
C) constant dividend, variable payout ratio
D) variable payout ratio, constant dividend