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Chapter 13 dividend

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Answer
Dividends   cash distributions made to stockholders from the firm's earnings  
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optimal dividend policy   strikes a balance between current dividends and future growth and maximizes the firms stock price  
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Dividend irrelevance thoery   states the firms dividend policy has no effect on either or cost of capital  
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dividend relevance theory   theory that the value of the firm is affected by the dividend policy.  
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information content(signaling) hypothesis   the theory that investors regard dividend changes as signals of mgmt earnings forecasts  
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Clientele effect   to attract the type of investor who likes its dividend policy  
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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.  
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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.  
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stable,predicitable dividends   payment of a specific dividend each year, or periodically increasing dividend  
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constant payout ratio   payment of a constant percentage of earnings as dividends each year  
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extra dividend   a supplement dividend paid in years when a firm has excess funds to distribute  
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Declaration Date   The day the dividend becomes a Liability  
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Holder-of-record-Date   The date the company determine who recieves the dividend  
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Ex-Dividend Date   The date dividende stop, New purchasters dont receive dividends  
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Payment Date   The Date the firm makes the dividend Payment  
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Dividned re investment Plan (DRIP)   Enables stockholders to automatically reinvest dividends recieved back into the stock of the paying firm.  
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Stock Split   A action taken by a firm to increase the # of shares outstanding which decrease the per share stock price.  
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Stock Dividend   dividends paid as additional shares of stock instead of cash  
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