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Basic Question 5 of 13
Which of the following is not a step in determining dividends under the residual theory of dividends?
B. determine the amount of equity necessary to meet the target capital structure
C. use retained earnings to fill the equity requirement to the extent possible
D. determine the amount of external financing necessary to maintain a target payout ratio
A. determine the optimal capital budget
B. determine the amount of equity necessary to meet the target capital structure
C. use retained earnings to fill the equity requirement to the extent possible
D. determine the amount of external financing necessary to maintain a target payout ratio
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Learning Outcome Statements
compare stable dividend with constant dividend payout ratio, and calculate the dividend under each policy;
describe broad trends in corporate payout policies;
CFA® 2025 Level II Curriculum, Volume 3, Module 16.