Which of the following is (are)true?
A) In general, the higher the number of positive NPV investment opportunities for a firm, the lower the dividend payout ratio.
B) If the clientele effect is correct, firms should follow a constant dividend payout ratio policy.
C) According to the informational content of dividends, an increase in dividends is always a positive signal.
D) In industries with volatile earnings, the residual dividend policy results in the most consistent dividend stream.

Question

Quizplus · Accepted Answer

Firms with more positive NPV investment opportunities tend to retain earnings to finance these projects, leading to a lower dividend payout ratio.

Which of the Following Is (Are)true