Answered>Order 1368

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