2. Explain the concept of dividend policy with an example.
4. Discuss the dividend irrelevance theory with underlying assumptions by Modigliani and Miller.
6. Your parents prefer high dividend paying stocks, while you prefer no-dividend stocks – explain the possible reasons for the differences in choice.
8. Explain the following concepts with an example;
   2. Signaling hypothesis
   4. Clientele effects
   6. Catering theory

6. You are the CEO of “I am the top 1%” Corporation, which has a capital structure of 60% equity and 40% debt. The estimated net income of your company is $600K. Your capital budget is $800K for the coming year. If you follow the residual dividend models, how much dividend you can pay and what is your pay-out ratio? What happens to dividend when estimated net income is $400K or $800K?
8. Discuss the advantages and disadvantages of Residual dividend policy.
10. What are the steps you consider in setting your dividend policy?
12. Explain the concept of DRIP with an example.
14. Discuss the differences between the stock split and stock dividends.
16. Discuss the concept of share repurchases. What are the advantages and disadvantages of share-repurchase?

Answer rating: 100% (QA)

Dividend Policy Dividend policy refers to the strategy a company employs to decide how much of its earnings it will distribute to shareholders in the form of dividends Companies can choose to pay out ... View the full answer