If a Firm Adheres Strictly to the Residual Dividend Policy

Multiple Choice

If a firm adheres strictly to the residual dividend policy, the issuance of new common stock would suggest that

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