The dividend market is in equilibrium when: A. All firms adopt a low dividend policy. B. The total amount of the annual dividends is equal to the net income for the year. C. Dividends remain constant and no special dividends are declared. D. All clienteles are satisfied. E. Half of the firms adopt a low dividend policy and half adopt a high dividend policy.

Answer: D. All clientele are satisfied

Explanation: At equilibrium all firms gives dividend and simultaneously issues new stocks, some other firms do not pay any dividend to his shareholders. The reason behind it that dividend reveals private information not covered by corporate audits and current stockholders.

The dividend market will be in equilibrium when all the clientele are satisfied which a rare event in business.