Asked by Ahmed Alsuhayyih on May 11, 2024
Verified
A manufacturing firm that is highly sensitive to the economic growth of the national economy is most likely to adopt a _______ dividend policy.
A) Constant.
B) Special.
C) One-time.
D) Cyclical.
E) Residual.
Cyclical Dividend Policy
A dividend payment strategy by companies that varies depending on the economic cycle, with higher payouts during economic prosperity and lower or no dividends during downturns.
Economic Growth
An increase in the production and consumption of goods and services, indicating a country's economic health.
Manufacturing Firm
A business that produces goods through the use of labor, machines, tools, and chemical or biological processing or formulation.
- Understand the influence of economic conditions on dividend policies of firms.
Verified Answer
AR
Asyifah RamadhantiMay 15, 2024
Final Answer :
D
Explanation :
A cyclical dividend policy is likely to be adopted by firms sensitive to economic cycles, as their dividends would fluctuate in line with their earnings, which are directly affected by the state of the economy.
Learning Objectives
- Understand the influence of economic conditions on dividend policies of firms.