Assume that clienteles exist.Given this assumption,which one of the following statements is correct?

Question

Quizplus · Accepted Answer

If clienteles exist, dividend policy is not irrelevant. However, different clienteles may prefer different levels of dividend payouts. As long as each clientele group is currently satisfied, the dividend policy is considered to be optimal for that group. Therefore, firms may vary their dividend payout policy to cater to different clienteles. However, this does not necessarily mean that all firms will adopt a high or low dividend payout policy, making options A and E incorrect. Option B is also incorrect as the relationship between dividend payouts and share prices is not straightforward. Option C is also incorrect as even if some investors ignore dividends, others may still consider them important.

Assume That Clienteles Exist