the goal of finance is to maximize dhareholder wealth, and the divdend policy that ahvieves tjat...

the goal of finance is to maximize dhareholder wealth, and the divdend policy that ahvieves tjat goal is.... a.) constant dividend policy b.) dividend smoothing policy c) stable d.) residual e.) none of above

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Expert Solution

Answer. (d) Residual

Because In the residual dividend policy, the primary focus of the firm’s management is indeed on investment, not dividends. Dividend policy becomes irrelevant, it is treated as a passive rather than an active, decision variables.

In case of Residual dividend policy the view of management is that the value of firm and the wealth of its shareholders will be maximized by investing the earnings in the appropriate investment projects, rather than paying them out as dividends to shareholders.

So we can conclude that residual dividend policy helps to achieve the goal of finance to maximize shareholders wealth

jeff jeffy answered 1 year ago

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