Question

Dividend policy is influenced by: A)        the desire of a company for growth. B)        the difficulty...

Dividend policy is influenced by:

A)        the desire of a company for growth.

B)        the difficulty of obtaining funds from other sources.

C)        the perceived preference of shareholders for dividend income.

D)        all of the above.

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Answer #1

d) All of the above
Because lower dividend payout higher will be the retention ratio and higher will be the growth . Growth = (1- dividend payout) * Return on Equity.
Retained earnings are a very important source of capital. By lowering dividend payout or by delaying it the retained earnings increases which can be used than other costlier and riskier. Sources of capital
Dividend policy is also done to stimulate the market and bring trust of the shareholders. Regular dividend payments are better for the investors

Best of Luck. God Bless

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