If stockholders have a preference for divided income, the optimal dividend policy is to treat dividends as a residual.

Question

Quizplus · Accepted Answer

The optimal dividend policy, when stockholders have a preference for dividend income, is typically to provide regular and possibly increasing dividends, rather than treating dividends as a residual and potentially varying them significantly based on the company's investment opportunities and earnings.

If Stockholders Have a Preference for Divided Income, the Optimal