1 A policy under which the firm pays dividends only after its capital investment needs are met, and while maintaining a constant debt/equity ratio, is called a __________________.

A) homemade dividend

B) clientele effect

C) residual dividend policy

D) constant dividend growth model

E) none of the above

2- The ability of shareholders to undo the dividend policy of the firm and create an alternative dividend payment policy via reinvesting dividends or selling shares of stock is called:

A) Homemade dividend policy.

B) Residual dividend policy.

C) Dividend policy irrelevance.

D) Compromise dividend policy.

E) None of the above.