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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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    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 ...

    Solution Summary

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