Question

In the real world, dividends a. are usually changed every year to reflect earnings changes, and these changes are randomly higher or lower, depending on whether earnings increased or decreased. b. fluctuate more widely than earnings. c. tend to be a lower percentage of earnings for mature firms. d. are usually more stable than earnings. e. are usually set as a fixed percentage of earnings, e.g., at 40% of earnings, so if EPS

Answer 1

Option D

Dividends are usually more stable than earnings

Step-by-step explanation:

A dividend refers to money which is paid to a shareholder of a particular business on a yearly basis, usually when the business makes profits.

However, consistent payment of dividends attracts investors to a company. as a result it is not in the character of most successful companies to declare some dividends and keep on changing the values, as this will make them look like they are performing badly financially.

As a result, paid dividends to shareholders are kept relatively stable for the benefit of both the shareholders and the company