Alma is interested in receiving income to help save money for her grandsons college education. She is considering investing in the stock of a fast-growing technology company that is promising a rather high dividend rate to shareholders. One thing it will be helpful for Alma to remember is:

that dividends are always based on the prevailing market price of the stock.

the dividend rate of a company cannot be changed once it is set.

fast-growing companies are rather secure investments to purchase.

the company does not have a legal obligation to pay dividends when promised.