explain the discounted dividend model
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explain the discounted dividend model
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- Explain how to use the free cash flow valuation model to find the price per share of common equity.Define each of the following terms: a. Optimal distribution policy b. Dividend irrelevance theory; bird-in-the-hand theory; tax effect theory c. Signaling hypothesis; clientele effect d. Residual distribution model; extra dividend e. Declaration date; holder-of-record date; ex-dividend date; payment date f. Dividend reinvestment plan (DRIP) g. Stock split; stock dividend; stock repurchaseExplain the theory behind the dividends-based valuation approach. Why are dividends value-relevant to common equity shareholders?