CFA Practice Question

There are 151 practice questions for this study session.

CFA Practice Question

A firm follows a constant dividend payout ratio policy. If their earnings increase by 25 percent, their dividends will increase by ______ percent.

A. 0
B. 25
C. 50
Correct Answer: B

When a firm has a constant dividend payout ratio policy, the growth rate in the dividends will be the same as the growth rate in earnings.

User Contributed Comments 2

User Comment
haarlemmer In reality, management tends to act in a fashion different than this. More conservative manner will be taken.
SueLiu Generally not a constant div. payout policy but a stable div policy.
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