Question | Answer |
Dividends | cash distributions made to stockholders from the firm's earnings |
optimal dividend policy | strikes a balance between current dividends and future growth and maximizes the firms stock price |
Dividend irrelevance thoery | states the firms dividend policy has no effect on either or cost of capital |
dividend relevance theory | theory that the value of the firm is affected by the dividend policy. |
information content(signaling) hypothesis | the theory that investors regard dividend changes as signals of mgmt earnings forecasts |
Clientele effect | to attract the type of investor who likes its dividend policy |
Free cash flow hypothesis | All else is equal, the firm should distribute any earningsthat cannot be reinvested at a rate at least greater then the investors required rate. |
residual dividend policy | Dividend only paid when earnings are greater than what is needed to finance the equity portion of the firm's optimal budget for the year. |
stable,predicitable dividends | payment of a specific dividend each year, or periodically increasing dividend |
constant payout ratio | payment of a constant percentage of earnings as dividends each year |
extra dividend | a supplement dividend paid in years when a firm has excess funds to distribute |
Declaration Date | The day the dividend becomes a Liability |
Holder-of-record-Date | The date the company determine who recieves the dividend |
Ex-Dividend Date | The date dividende stop, New purchasters dont receive dividends |
Payment Date | The Date the firm makes the dividend Payment |
Dividned re investment Plan (DRIP) | Enables stockholders to automatically reinvest dividends recieved back into the stock of the paying firm. |
Stock Split | A action taken by a firm to increase the # of shares outstanding which decrease the per share stock price. |
Stock Dividend | dividends paid as additional shares of stock instead of cash |