Question: Which statement is correct? 1. Dividends tend to be more erratic than earnings. 2. Firms are equally likely to increase or decrease their normal dividends

Which statement is correct?

1. Dividends tend to be more erratic than earnings.

2. Firms are equally likely to increase or decrease their normal dividends per share.

3. Tax rates are the key determinant to a companys dividend policy.

4. Dividend growth tends to lag earnings growth.

5. Mature firms are less apt to pay dividends than young firms.

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