Distributions to shareholders

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A) List and briefly discuss two motivations that would lead a firm to engage in a stock repurchase versus a straight cash dividend.

B) Briefly describe the implications of the tradeoff between dividends and free cash flow retention.

C) Explain this statement: Even though both the Constant Dividend Payout theory of dividends and the residual theory of dividends result in erratic dividends over time, both theories arrive at the same conclusion differently. (Hint: Figure out what the conclusion is first.)

D) In what way is the Modigliani/Miller dividend irrelevance theory similar to the residual dividend theory?

Reference no: EM1337323

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