a) Dividend relevance theory is the theory, advanced by Gordon and Lintner, that identifies there is a

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a) Dividend relevance theory is the theory, advanced by Gordon and Lintner, that identifies there is a direct relationship between a firm’s dividend policy and its market value. Compare and contrast the bird-in-the-hand argument and informational content theories.

b) Salam Investment has outstanding borrowings that include preferred stock. One of these borrowings is (nonconvertible) preferred stock (cumulative) with a par value of $250 and an annual dividend rate of 8.25%. This preferred stock is currently selling for $260 per share. Calculate the required rate of return on this nonconvertible preferred stock. List the formula and steps clearly.

c) Jusco Malaysia is selling for $30 a share. In looking at the stream of dividends over the past ten years, you find out that the first dividend was $1.00 and the last dividend was $2.00. Calculate the required rate of return from investing in this share. Clearly explain your steps and write the formula used