Which one is true?

Dividends generally:

1) are more stable than earnings

2) fluctuate more than earnings

3) are guaranteed by the SEC

4) are paid as a fixed percentage of earnings

Any and all help with this problem will be appreciated.

Which one is true?

Dividends generally:

1) are more stable than earnings

2) fluctuate more than earnings

3) are guaranteed by the SEC

4) are paid as a fixed percentage of earnings

Any and all help with this problem will be appreciated. answer to # 3 . I think the only people who could guaranteed is the gov ( like;100k in the bank or bond)... you only get dividend if the company gain (earning)... I think none of these are true: the company may gain (earn) but if it decide to invest ( new equipment, D&R ) of all the gain then you get no dividen... or the worst accounting enron's style

Your answer to this problem would be number three.

Your answer to this problem would be number three.
No no... the sec could not guarantee on any thing

Which one is true?

Dividends generally:

1) are more stable than earnings

2) fluctuate more than earnings

3) are guaranteed by the SEC

4) are paid as a fixed percentage of earnings

Any and all help with this problem will be appreciated.

You have all made some good points.

Word questions suck.

It is not number 3 though. The SEC is the US Securities and Exchange Commission. They do not guarantee that you will get a dividend from a company. Each company makes their own decision as to whether to pay dividends.

It is not number 4. Dividends are never paid in percentage of earnings, but rather, $1/share, or so forth.

I would say the answer is number 1 – dividends are more stable than earnings.

If a company makes profit of $4,000,000 in 2005 and let’s say they give a $2 dividend per share.

If in 2006 they have profits of only $1,000,000, they still might give the $2 dividend.

If they were to lower their dividend, their stock price would take a big hit. So typically, when a company pays dividends, they usually do not lower them if they don’t really have to.

Which one is true?

Dividends generally:

1) are more stable than earnings

2) fluctuate more than earnings

3) are guaranteed by the SEC

4) are paid as a fixed percentage of earnings

Any and all help with this problem will be appreciated.

Take it from a Finance Major the answer is Number 1. Here is why the others are not:

2.) Dividends usually do not fluctuate at all, but earnings from year to year do. Dividends paid are set by the management of the corporation and to show stability management likes to keep paying said dividend at the same rate year, after year.

3.) The SEC does nothing more than collect financial information of companies who sell securities to the public. The SEC neither qualifies the quality of the investment nor regulates the decisions that a corporation makes. The main purpose of the SEC is to make business provide to the public as much information as possible so investors may make an informed decision.

4.) Again, four is wrong because Dividends are set by management and have nothing to do with earnings.

WHO THE HELL THOUGHT 3 Was RIGHT!!