There has been a boost in earnings. The corporate finance team believes this will be a temporary boost. Accordingly, it is advising managers not to increase the dividend this year. Is this sound advice?

Select one:

a. No, because a boost in earnings, even a temporary one, is an opportunity to reward shareholders.

b. Yes, because it's always best to retain earnings when you have the opportunity.

c. No, because dividend policy is irrelevant. As such, the company may as well reward shareholders now and cut the dividend next year.

d. Yes, because dividends only diminish the financial strength of the company.

e. Yes, because the increase will have to be retracted next year and maintaining a steady dividend payout ratio without cutting dividends is the preferred strategy.