Quiz Ch 14 – T/F Residual Dividend Model’s Relation between Debt Ratio and Payout Ratio
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
True or false: Utilizing the residual dividend model for dividend policy entails determining dividends after assigning equity for the capital budget. In this model, assuming other factors are unchanged, a higher firm debt ratio corresponds to a lower payout ratio.