A firm's dividend policy involves a trade-off between:
A) a large asset base and a small asset base.
B) high share price versus low share price.
C) internal versus external financing of investment.
D) all of these.

Question

Quizplus · Accepted Answer

Dividend policy involves deciding how much of a firm's profits to distribute as dividends versus how much to retain for internal investment. This decision results in a trade-off between internal (using profits to fund investment) and external financing (raising funds from outside sources). The other options presented do not accurately reflect the trade-off involved in dividend policy.

A Firm's Dividend Policy Involves a Trade-Off Between