a) If you were devising an optimal dividend policy for a firm with many potential positive-NPV investment opportunities and a growing asset base, what type of dividend policy would you lean toward?

b) Suppose two equally risky shares, Div and Cap, offer the same expected return before tax. Div shares pay a generous dividend but offer low expected capital gains. Cap shares pay low dividends but offer high expected capital gains. Which of the two shares would a pension fund prefer? An individual? A corporation? Explain your answer?