Which of These Actions Is an Illustration of the Residual

Multiple Choice

Which of these actions is an illustration of the residual theory of dividends?

A) Boosting EPS by buying back shares to reduce the pool of shareholders to whom dividends are distributed.
B) Reducing the Dividend Payout Ratio to improve EPS.
C) Retaining earnings in a reserve fund to ensure sufficient cash for distribution to shareholders.
D) Replacing distributed dividends with riskier debt capital to lower cost of capital.
E) Funding projects with a positive NPV and distributing the rest of the earnings as dividends.