The residual theory of dividend policy asserts that Select one: A. sufficient di

Question

The residual theory of dividend policy asserts that Select one:

A. sufficient dividends are paid to maintain a stable total dividend payment--any residual is invested internally by the firm. B. sufficient dividends are paid to maintain a stable dividend payout ratio--any residual is invested internally by the firm. C. dividends are paid out of the residual remaining after internal investments by the firm. D. dividend payments are adjusted to maintain dividends at a constant percentage of total cash flows.

Explanation / Answer

The residual theory of dividend policy asserts that dividends are paid out of the residual remaining after internal investments by the firm.

.

Therefore the correct answer is :-

Option-C. dividends are paid out of the residual remaining after internal investments by the firm.

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