Dividend Policy

1.What is dividend Policy?
Ans: The firm’s plan of action to be followed whenever a dividend decision is made is called dividend policy.
2.Define cash dividend?
Ans. If the dividend is paid in the form of cash to the shareholders is called cash dividend.
3.Define stock dividend.
Ans. Stock dividend is paid in the form of the company stock due to raising of more finance.

4.What are the alternative forms of cash
dividend?
Ans. Stock dividend, stock split repurchase of stocks. 5.Define stock split?
Ans. A stock split is a corporate action that increases the number of the corporation’s outstanding shares by dividing each share, which in turn diminishes its price.

6. What indicates the stock split ?
Ans. Stock split indicates continued high growth.

7. What is the main object of reverse split?
Ans. The reverse split is normally used to keep the price of the stock from falling below a certain level.

8.What is signaling (সিগনালিং)?
Ans. Signaling is the idea that one agent
conveys some information about itself to 16
another party through an action.
9. According to Walter’s and Gordon’s Model, what is the meaning of the following, When r> Ke?
10. Ans. It is a growing company. The value of shares is inversely related to the D/P ratio.

11. What is floatation cost?
Ans. The costs associated with issuing securities, such as underwriting, legal, listing, and printing fees.
12. What is the constant payout ratio dividend policy? Ans. A dividend policy based on the payment of a certain percentage of earnings to the owners in each dividend period.
13. What is bird in hand argument ?
14. Ans. The brief, in support of dividend relevance theory, that investors see current dividends as less risk than future dividends or capital gains.

14. What is stock repurchase ?
Ans. Stock repurchase is a program by which company buys back its own shores from th marketplace, reducing the number outstanding shares.
15. What is reverse stock split?
16. Ans. Reverse stock split is a method used to raise the market price of a firm’s stock by exchanging a certain number of outstanding shares for one new shares.
17. How can you calculate the share price under walter’s model?
Ans: P=D+ R /K(E-D)/K