Since it would result in a fluctuating dollar amount of dividends, few firms attempt to maintain a constant ____ of dividends to current earnings.

Question

Quizplus · Accepted Answer

The term "ratio" refers to a relationship between two variables, in this case dividends and earnings. Maintaining a constant ratio of dividends to current earnings would mean that the amount of dividends paid out would adjust based on the level of earnings, resulting in a fluctuating dollar amount. Therefore, option B is the best choice. Options A, C, and D do not accurately describe the situation described in the sentence.

Since It Would Result in a Fluctuating Dollar Amount of Dividends