The Problem with a Constant-Payout-Ratio Dividend Policy from the Shareholders

Multiple Choice

The problem with a constant-payout-ratio dividend policy from the shareholders' perspective is that ________.

A) it pays constant dividend irrespective of the earnings of a firm
B) if the firm's earnings drop, the dividends tend to be lower
C) even when earnings are low, the company must pay a fixed dividend
D) there is no uniformity in this type of dividend policy