The problem with the constant dividend payout ratio is
A) investors may 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 that year.
D) management cannot decrease the dividend when times are tough.

Question

Quizplus · Accepted Answer

A constant dividend payout ratio means that the dividend changes in direct proportion to earnings, leading to fluctuating dividend amounts.

The Problem with the Constant Dividend Payout Ratio Is