A "stable dividend policy" means:
ADividend is fixed regardless of earnings
BA regular dividend per share is maintained, with extras when warranted
CNo dividend is ever paid
DDividend is the same as EPS
Answer & Solution
Correct answer: B. A regular dividend per share is maintained, with extras when warranted
1. Stable dividend: management aims to maintain a regular DPS.
2. May supplement with extras in good years.
3. Provides signalling reliability to investors.
_Source: ICAI BoS CA Inter Paper 6A, Ch 8 "Dividend Decisions", §4 — Dividend Policies_
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