The problem with the residual dividend policy ratio is
A) investors might come to expect a specified amount.
B) the dollar amount of the dividend fluctuates from year to year.
C) management is reluctant to cut the dividend even if there are low profits in a year.
D) all of the above are possible problems.

Question

Quizplus · Accepted Answer

The residual dividend policy can lead to fluctuating dividend amounts because dividends are paid out from leftover earnings after all suitable investment opportunities have been funded.

The Problem with the Residual Dividend Policy Ratio Is