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Dividends Policy Explanation

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"Risky companies tend to have lower target payout ratios and more gradual adjustment rates." Explain what is meant by this statement. Why do you think it is so?

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Solution Summary

The solution gives a 129-word explanation of the dividend policies of risky companies.

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Risky companies have wide fluctuations in profits. Therefore they will have difficulty in maintaining dividends.

Even when profits are high, they will not like to pay high dividends but ...

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