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Dividend reinvestment plans are attractive for investors because:

• transaction fees are often subsidized by the form
• dividends are not taxed if reinvested in the
• plan firm's pay extra dividend to those enrolled in the plan
• allows the investor to choose the stock that he/she can invest into

A firm that follows a constant payout ratio will most likely have:

• stable dividend payments
• constant amount of dividends per year
• fluctuating dividend payments even when earnings are stable
• fluctuating dividend payments when earnings are fluctuating

A regular stock split:

• changes the amount of par value per stock reduces income of the firm
• increases the treasury shares of the firm
• increases the treasury shares of the firm
• increases the dividend per share paid by the firms

Which of the following statements is incorrect?

• Many firms offer to reinvest stockholders' cash dividends
• In new shares of its stock through dividend reinvestment plans (DRIP).
• Firms with a large number of acceptable capital budgeting projects generally have low dividend-payout ratios.
• The primary factor that influences the dividend policies of companies around the world is the level of protection that exists for the rights of minority stockholders.

Dividend policy that pays a specific dollar dividend each year or periodically increases the dividend at a constant rate:

• constant amount
• constant payout ratio
• residual
• stable, predictable

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