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Basic Question 3 of 13

A firm follows a constant dividend payout ratio policy. If their earnings increase by 25 percent, their dividends will increase by ______ percent.

A. 0
B. 25
C. 50
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User Contributed Comments 2

User Comment
haarlemmer In reality, management tends to act in a fashion different than this. More conservative manner will be taken.
SueLiu Generally not a constant div. payout policy but a stable div policy.
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I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes

Barnes

Learning Outcome Statements

compare share repurchase methods;

calculate and compare the effect of a share repurchase on earnings per share when 1) the repurchase is financed with the company's surplus cash and 2) the company uses debt to finance the repurchase;

calculate the effect of a share repurchase on book value per share;

CFA® 2026 Level II Curriculum, Volume 3, Module 16.