Question: In the real world, dividends O a. are usually changed every year to reflect earnings changes, and these changes are randomly higher or lower, depending

In the real world, dividends O a. are usually changed every year to reflect earnings changes, and these changes are randomly higher or lower, depending on whether earnings increased or decreased O b. are usually set as a fixed percentage of earnings, eg, at 40% of earnings, so if EPS - $2.00, then DPS will equal 80.80. Once the percentage is set, then dividend policy is on automatic pilot" and the actual dividend depends strictly on earnings. care usually more stable than earnings. d. tend to be a lower percentage of earnings for mature firms. e fluctuate more widely than earnings

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