If a Firm Adheres Strictly to the Residual Distribution Policy

Multiple Choice

If a firm adheres strictly to the residual distribution policy (with all distributions in the form of dividends) , a sale of new common stock by the company would suggest that

A) The dividend payout ratio has remained constant.
B) The dividend payout ratio is increasing.
C) No dividends were paid for the year.
D) The dividend payout ratio is decreasing.
E) The dollar amount of investments has decreased.