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A residual dividend policy differs from a stable dividend policy in the following respect: a. Dividends are a function of operational costs under the stable
A residual dividend policy differs from a stable dividend policy in the following respect:
a.
Dividends are a function of operational costs under the stable policy method but are a function of investment needs under the residual policy method.
b.
Dividends are a function of long-term profits under the stable policy method, but are a function of investment needs under the residual policy method.
c.
Dividends can only be stable under a residual policy if profits are constant.
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