39．A company's dividend policy is based on a strict residual model. All other factors being equal, if the company's dividend payout decreased from 50 percent in 2001 to 20 percent in 2002, the company most likely experienced:

Select exactly 1 answers from the following:
A. a decrease in investment opportunities.
B. an increase in investment opportunities.
C. no change in investment opportunities, but an increase in the targeted debt-to-assets ratio.
D. no change in investment opportunities, but an increase in the weighted average cost of capital.
答案和详解如下！

Feedback: Correct answer: B

Fundamentals of Financial Management, 8th edition, Eugene F. Brigham and Joel F. Houston (Dryden, 1998), pp. 550?55

2006 Modular Level I, Vol. III, pp. 195-200

Study Session 11-51-e

describe the residual dividend model, and discuss the model抯 possible advantages or disadvantages to the company

A dividend policy based on a strict residual model means the firm pays dividends only if it has earnings above the amount required to fund its optimal capital budget; all else equal, the greater the investment opportunities, the lower the dividend payout.

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