Which of the following statement(s) about dividends are FALSE?
– Dividends are ineffective in mitigating the free-cash-flow problem because paying dividends is not mandatory and hence managers always have the option to stop paying dividends
– A firm can smooth its dividend payments across periods by adopting a residual dividend policy
– If a firm adopt a target payout policy, the firm pays the same percentage of net income as dividends across periods. ?
Question:
– 1 and 2 only
– 1 and 3 only
– 2 and 3 only
– none of the above
– all of the above
