Firms following the constant payout ratio dividend policy:
A. will have a stable dividend payment when earnings fluctuate.
B. will have a fluctuating dividend payment when earnings are stable.
C. will have a higher cost of equity when earnings are stable compared to other similar firms.
D. will have a lower cost of retained earning when earnings are volatile compared to other similar firms.
E. will have a fluctuating dividend payment when earnings fluctuate.
Answer: E
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