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Hi John.
In b, why theta company’s dividend is confusing? How it may cause unnecessarily fluctuations in share price?Shareholders prefer nice constant growth in dividends so that they can forecast how much they will receive. They don’t like it when dividends keep changing – some years growing a lot and some years not growing.
If they are not sure what to expect in the future, the share price will fluctuate as their expectations change (because it is the dividends they expect that determine the share price).
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