If a firm strictly adheres to the residual dividend policy, a sale of new common stock by the company would suggest that The dividend payout ratio has remained constant. The dividend payout ratio is increasing. No dividends were paid for the year. The dividend payout ratio is decreasing. The dollar amount of investments has decreased.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 18P
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  • If a firm strictly adheres to the residual dividend policy, a sale of new common stock by the company would suggest that
  1. The dividend payout ratio has remained constant.
  2. The dividend payout ratio is increasing.
  3. No dividends were paid for the year.
  4. The dividend payout ratio is decreasing.
  5. The dollar amount of investments has decreased.
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