that dividends are always based on the prevailing market price of the stock. the

Question

that dividends are always based on the prevailing market price of the stock.

the dividend rate of a company cannot be changed once it is set.

fast-growing companies are rather secure investments to purchase.

the company does not have a legal obligation to pay dividends when promised.

Alma is interested in receiving income to help save money for her grandson’s college education. She is considering investing in the stock of a fast-growing technology company that is promising a rather high dividend rate to shareholders. One thing it will be helpful for Alma to remember is:

Explanation / Answer

the company does not have legal obligation to pay dividends when promised

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