CFA Assessment - Corporate Finance - Dividend policy

[archived_user]

Hi,
In the second set of the assessments for corp finance, one question asks if the dividend policy is stable or constant.
It is indeed a constant payout ratio, so according to the curriculum i chose the option “Stable”. The answer turned out to be “Constant” !
I mean, isn’t
- constant $ = Constant
- constant % = Stable
Please anyone shed some light on this for me !

 

[archived_user]

Constant = same Div in $
Stable = Same payout ratio in %

 

[archived_user]

After some additional research in the curriculum, here’s what i found :
Sable policy => use the Target formula
Constant policy => constant % payout ratio

 

[archived_user]

gnrocks wrote: After some … research in the curriculum … .

Interesting approach.
Perhaps more people ought to try that.

 

[archived_user]

S2000magician wrote:

gnrocks wrote: After some … research in the curriculum … .

Interesting approach.
Perhaps more people ought to try that.

At this point i am only refering to the curriculum ! For any other CFA exam that i will study for, I think i will not use any third-party material again. 3rd party often skip or summarize concepts so much !

 

[archived_user]

Its constant dividend pay out ratio when you take dividend/Net income when it gives you a constant figure across all years then its a constant divident pay out ration and not stable because the fomula ration you have used is for constant dividend payout ratio