CFA Practice Question
The ______ says that the firm should follow its investment policy of accepting all positive NPV projects and paying out dividends when, and only when, funds are readily available.
A. dividend signaling hypothesis
B. residual theory of dividends
C. positive adjustment theory
Explanation: The residual theory of dividends says that the firm should follow its investment policy of accepting all positive NPV projects and paying out dividends when, and only when, funds are readily available.
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