Asked by Denise Rangel on May 12, 2024
Verified
Based on the homemade dividend argument, dividend policy is irrelevant.
Homemade Dividend
A concept where investors sell a portion of their portfolio to create cash flow, as an alternative to receiving dividends from investments.
Dividend Policy
Dividend policy is the set of guidelines a company follows in deciding how much of its profit will be distributed to shareholders as dividends and how much will be reinvested in the business.
- Understand the relevance of dividend policy in different financial contexts.
Verified Answer
ES
Erika SandovalMay 16, 2024
Final Answer :
True
Explanation :
According to the homemade dividend argument, investors can create their own dividend policy by buying or selling shares of their investments, making the company's actual dividend policy irrelevant to their personal cash flow needs.
Learning Objectives
- Understand the relevance of dividend policy in different financial contexts.
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