05 Lecture Flashcards
1
Q
Between which kinds of payouts do you distinct
A
- Share repurchase
- Dividend
max retained earnings plus free reserves
2
Q
What is the client Effect
A
Ignoring Transaction costs investors could sell the shares on the cum-date to those with lowest tax rates
3
Q
How should the dividend policy of companies be?
A
Firms should follow a consistent dividend policy
4
Q
What does a Dividend increase signal
A
Company feels confident that it can keep the dividend at the same level for years to come
5
Q
What does a Stock Split signal
A
Same as a dividend increase if it is paid per share
6
Q
What does a Share Repurchase signal
A
That the stock is undervalued
7
Q
Which three things interfere with dividend policies
A
Taxes -> Clientel effect
Assymetric Information -> Signaling Theory
Agency Costs -> Agency Theory
