Which one of the following tends to be the primary attitude of firms\' towards t

Question

Which one of the following tends to be the primary attitude of firms' towards their dividend policy? Select one: a. Dividends should be increased annually no matter what. b. Dividend smoothing is talked about but is not really a factor that affects dividend decisions. c. Dividends should be flexible and adjusted annually in response to changes in the firm's earnings. d. Once a dividend is increased, it should not be decreased. e. The costs associated with cutting dividends are perceived to be less than the costs of obtaining external financing.

Explanation / Answer

The correct option: Dividends should be flexible and adjusted annually in response to changes in the firm's earnings

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