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Basic Question 3 of 13

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
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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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Craig Baugh

Craig Baugh

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.