Title: Corporate Finance, 10th Edition Author: Stephen A. Ross, Randolph W. Westerfield, and Jeffrey Jaffe
During this week, we will discuss the dividend theories and policies, and the issuing of securities to the public: Types of dividends, the irrelevance theory, the “bird-in-the hand” theory, the information content, the signaling hypothesis, and the clientele effect. Also different dividend policies: residual dividend, etc. Further, stock splits and stock dividends. In addition, the public issue of securities, their cost, rights, and dilution.
By the end of this week, you should be able to:
· Understand the different dividend theories.
· Test these theories.
· Know the different dividend policies.
· Learn about stock splits and stock dividends.
· Know about the IPOs.
· Understand the role of the investment banks.
· Calculate the cost of new issues.
Week 8 Discussion – Dividend Theories and Issuing Securities to the Public. (Please find attached file)
· Is the dividend irrelevant for a stock?
· What is the optimal dividend?
· What is the best dividend policy?
· Why is the cost of equity higher than the cost of debt?
Also, please respond to at least one other student’s post by the end of the week !!!