contestada

The dividend market is in equilibrium when: A. All firms adopt a low dividend policy. B. The total amount of the annual dividends is equal to the net income for the year. C. Dividends remain constant and no special dividends are declared. D. All clienteles are satisfied. E. Half of the firms adopt a low dividend policy and half adopt a high dividend policy.

Respuesta :

ogorwyne

Answer:

D

Explanation:

The dividends market is at equilibrium when all clienteles are satisfied.

Dividend refers to cash paid out of earnings. The clientele effect states that different investors require different levels of dividends.

40 percent of investors have preference for high dividends, and 20 percent of firms pay high dividends.

The high dividends firms will have short supply causing their stock prices to increase. Then firms with low dividend firms will have the advantage to switch policies until 40 percent of all firms have high payouts. At this point, the dividend market is in equilibrium. Any

changes in policy are needless at this stage because all of the clienteles are satisfied.

Osas9

Answer: D. All clientele are satisfied

Explanation: At equilibrium all firms gives dividend and simultaneously issues new stocks, some other firms do not pay any dividend to his shareholders. The reason behind it that dividend reveals private information not covered by corporate audits and current stockholders.

The dividend market will be in equilibrium when all the clientele are satisfied which a rare event in business.

Otras preguntas