For each of the companies described below, would you expect it to have a medium/high or a low dividend-payout ratio? Explain why.

a. A company with a large proportion of inside ownership, all of whom are high-income individuals.

b. A growth company with an abundance of good investment opportunities.

c. A company experiencing ordinary growth that has high liquidity and much unused borrowing capacity.

d. A dividend-paying company that experiences an unexpected drop in earnings from a trend.

e. A company with volatile earnings and high business risk.

Problems