According to the residual dividend theory, dividend payment is determined on the basis of:

CS Executive · Financial and Strategic Management · PYQS · December 2023
According to the residual dividend theory, dividend payment is determined on the basis of:
(A) The availability of excess funds after all investment opportunities with positive net present value are undertaken.
(B) The preference of shareholder for a consistent dividend payout ratio
(C) The desire to maintain a stable dividend payout ratio regardless of investment opportunity
(D) The goal of maximizing shareholder wealth by paying out all available earning as dividend

Answer & Explanation:

Correct Answer: Option (A)

Official answer key: (A).

Topics: Financial Management

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