Market Price per Share. Company A and company B are identical in every respect except for their dividend policies. Company A pays out a constant percentage of its net income (60 percent dividends),...

Market Price per Share. Company A and company B are identical in every respect except for their dividend policies. Company A pays out a constant percentage of its net income (60 percent dividends), while company B pays out a constant dollar dividend. Company B’s market price per share is higher than that of company A. The financial manager of company A does not understand why her market price per share is lower even though in some good years company A’s dividends exceed those of company B. Explain.