In case a firm decides to apply the residual dividend theory, what will most probably happen is that:

Select one:

a. Dividends will fluctuate from year to year.

b. The firms dividend policy decision will depend on the relative tax treatment for dividends and capital gains.

c. The firm will distribute a low regular plus an extraordinary dividend each year.

d. The firm will distribute a constant dividend in an annual basis.

e. The firm will create a stable clientele of long-term investors.